Economic reforms: Learning from Indian experience

That financial inclusion is a strategic policy prop for achieving the goals of inclusive and, thus, sustainable development, is incontestable. This is well borne out by the experiences of all developing countries, irrespective of stages of their growth. Bringing the unbanked population under the formal banking system facilitates this inclusion. This is well understood by all concerned. But this 'understanding' does not always translate into much-needed action for widening the scope for financial inclusion on a sustained footing.

In the South Asian context, India, the largest economy in the region, has undoubtedly set a good example of how to move steadily ahead with financial inclusion programmes. This has been highlighted amply well by Indian Finance Minister Arun Jaitley in a public lecture he delivered in Dhaka last week on the macroeconomic initiatives of the government of India. Three years ago, around 42 per cent of the Indian population were unbanked. The nationwide financial inclusion that the Modi government launched has now led to opening of about 300 million new bank accounts. This is no small number, even considering India's aggregate population at about 1.25 billion or more.

In his public speech, Mr Jaiteley elaborated how representatives or correspondents of the banks visited every home, effective campaigns were carried out, policy supports were extended as part of the programme for ensuring financial inclusion as far as possible. Such efforts are continuing on a sustained basis, being backed by proactive policy initiatives like those of 'Aadhar' to route targeted subsidy programmes. The benefits of financial inclusion that Indian economy and people at large are enjoying give credence to the strong pleadings that the Indian Finance Minister makes to countries like Bangladesh to take a dispassionate look at the experiences of his country about moving ahead with financial inclusion programmes.

There is no denying that financial inclusion is critically important for economic empowerment. It is, however, not the sole factor. Economic empowerment does also depend on many other opportunities in order to become meaningful for inclusive development in a broader sense. Access to technology in an increasingly digitalised global economy is one such opportunity. Here, Bangladesh has still quite a long way to go. Without effective policy interventions, things will not change here.

Similarly, Mr. Jaitely's suggestion for moving onto cashless society through digital banking on a fast track taking the cue from India, though quite relevant and valid ones when considered from a broader context, may not hold water for Bangladesh at this stage. Its basics - infrastructural facilities, level of e-literary and stage of human skill - should, first of all, be put in order. This does in no way mean that the country can afford to put such relevant matters to the backburner. Rather, it heightens the need for doing the needful expeditiously.

Apropos India's recent economic reforms like introduction of goods and services tax (GST), demonetisation etc., these do certainly provide useful lessons for many developing countries like Bangladesh. Mr Jaitley shed light on the same. The suggestions he makes about ways for tackling the issues of black money, shadow economy, tax evasion, transparency in financial transactions etc., do merit consideration. But this must also be noted that economic reforms that are part of an on-going process, relate to country-specific conditions. Here 'one-size-fits-all' recipe is hardly tenable. Moreover, the outcome of India's recent reforms, particularly its drastic demonetisation move, are still being debated within India itself.

While Mr. Jaitley's assessment of the situation in India gives a useful insight into its latest developments, this does not necessarily mean that any 'blind' replicability of reforms in one country, however, successful these may be, will suit the conditions in others. Yet the ideas and rationale behind India's recent economic policy moves, as was elucidated by its Finance Minister, provide a good ground for their examination and evaluation by all other countries for designing their own policies befitting their specific conditions.