A Model for Building Robust Economies : India’s Strategies for Building Stronger Economies

During a post-budget webinar on Enhancing Efficiency of Financial Services for Creating Growth Opportunities, Prime Minister Narendra Modi highlighted the Indian government’s policies on financial inclusion, which have made crores of people part of the formal financial system.

The Prime Minister Modi stated that the government has given Mudra loans of over 20 lakh crore rupees to fulfill the dreams of crores of youth, and over 40 lakh street vendors and small shopkeepers have received help from banks through PM Swanidhi Yojana.

The Prime Minister urged stakeholders to re-engineer processes to reduce the cost and increase the speed of credit so that it reaches small entrepreneurs quickly. He noted that the impact of India’s fiscal and monetary policy during the COVID-19 pandemic is being witnessed worldwide, and credited the government’s efforts in strengthening the economy’s fundamentals in the last nine years.

Mr. Modi highlighted changes in financial discipline, transparency, and an inclusive approach, noting that trust and expectations have replaced the question marks that used to surround discussions about India’s economy, budget, and goals. He emphasized that as India moves with new capabilities, the responsibility of those in the financial world has increased.

The Prime Minister emphasized the need for Vocal for Local, stating that it is a national responsibility and not just a matter of choice. He gave examples of higher education and edible oil, where building capacity in India could save money.

Mr. Modi called for support for the private sector, which is working for progress in different geographical areas and economic sectors. He also called upon the private sector to increase investment to maximize the country’s benefits.

Regarding taxes, the Prime Minister noted that the tax burden has significantly decreased in India due to GST, reduction in income tax and corporate tax, resulting in better tax collection. He underlined that the increase in the tax base proves people’s faith in the government, believing that their tax payment benefits the public good.

Finally, Mr. Modi noted that platforms developed by India, such as RuPay and UPI, are becoming models for the world, emphasizing the need to increase awareness about getting a copy of the bill that will benefit the nation in return.

Here are some ideas that can be borrowed, and how they could be useful to other countries:

1. Financial inclusion policies: As mentioned by Prime Minister Modi, policies related to financial inclusion have made crores of people part of the formal financial system in India. One such policy is the Jan Dhan Yojana, which was launched in 2014 to provide every household in India with a bank account. According to a report by the World Bank, as of 2018, 80% of Indian adults had a bank account, up from 35% in 2011. This policy could be useful for other countries looking to increase financial inclusion, especially in developing countries where a large section of the population is still unbanked.

2. Use of technology: PM Modi also highlighted the use of technology in financial services, citing the example of RuPay and UPI, which are low-cost and highly secure technologies developed in India. These platforms have become models for the world, with countries like Bhutan, UAE, and Singapore adopting them. The use of technology in financial services can help increase efficiency, reduce costs, and improve access, especially in areas where traditional banking services are not available.

3. Support for small entrepreneurs: The Prime Minister emphasized the need to support small entrepreneurs and increase the speed of credit to reach them quickly. One policy that has helped in this regard is the Mudra loan scheme, which provides loans of up to 10 lakh rupees to small entrepreneurs. According to a report by the Indian government, as of March 2021, over 31 crore loans worth over 17.5 lakh crore rupees had been disbursed under this scheme. Other countries could consider similar policies to support small entrepreneurs and boost economic growth.

4. Vocal for Local: Another policy highlighted by PM Modi is the “Vocal for Local” campaign, which aims to promote local products and industries. This policy could be useful for other countries looking to boost their local industries and reduce dependence on imports. For example, in Nigeria, the government launched the “Buy Naija to Grow the Naira” campaign to promote local products and reduce the country’s dependence on imports.

Overall, these policies and examples from India could be useful for other countries looking to improve financial inclusion, support small businesses, promote the use of technology, and boost local industries. By studying these policies and examples, countries can learn from India’s experience and adapt these policies to their own contexts to achieve similar outcomes.

Leave a Comment

Borrow an idea