By IE&M Research
Financial inclusion is still a far fetched dream despite all the government’s initiative. With investment in research and development of less than 1% of GDP, compared with 1.7 percent in China and 3.36 percent in South Korea (2010 figures) it would not be possible for the country to achieve the full benefit of the Digital India initiative. So the country needs to address barriers such as lack of computer literacy and limited telecom infrastructure and create an environment for innovation. This is the need of the hour with increasing number of people using a mobile phone. Digital finance—payments and financial services delivered via mobile phones could transform the economic prospects of individuals, governments and businesses boosting GDP and making financial inclusion a reality.
With findings from seven countries—Brazil, China, Ethiopia, India, Mexico, Nigeria, and Pakistan a report from the McKinsey Global Institute quantifying the impact of digital finance says that use of digital finance could increase the GDPs of all emerging economies by 6 percent, or a total of $3.7 trillion, by 2025 and this additional GDP could create up to 95 million new jobs across all sectors of the economy. The report says that Digital finance could provide access to 1.6 billion unbanked people, additional $2.1 trillion of loans to individuals and small businesses, governments could gain $110 billion per year by reducing leakage in public spending and tax collection and even providers of financial services could increase their balance sheets by as much as $4.2 trillion. According to the report India can add 10 to 12 percent to their GDP, given low levels of financial inclusion and digital payments today.