ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Did Demonetisation Accelerate Financial Inclusion?

The claim that removing cash would improve financial access for the poor has become a fallback argument for demonetisation, despite notebandi failing to achieve its other objectives. Like many other arguments made for abolishing cash in favour of digital payments, this claim does not stand up to scrutiny.

The MGNREGA Crisis

A decade after coming into force, the Mahatma Gandhi National Rural Employment Guarantee Act is suffering from a decline in employment, budget caps, delays in wage payments and rampant violations of workers' entitlements. An examination of the case of Jharkhand points to reasons for this crisis, including the absence of a strong grievance redressal system, weak financial institutions, acute shortage of functionaries and indiscriminate use of technology. However, some initiatives taken by the state government and civil society in the recent past open up new possibilities for improving the programme.

Doing More with Less

The current focus on financial inclusion has opened up solutions to reduce leakages in central and state government schemes. For these solutions to have a sustainable impact, deeper issues in public fund management must be addressed. These issues revolve on three key challenges: "first-mile" problems of transferring central and state funds to local implementation agencies in a timely, efficient and transparent manner; "last-mile" problems of sending benefits to beneficiary or vendor bank accounts without delays; and "beyond-the-last-mile" challenges of ensuring rural beneficiaries have adequate access to remote banking services. This paper reviews these three challenges and proposes a new public finance management system, namely, JAM+. The authors believe that these reforms have the potential to reduce India's fiscal deficit by ₹1 lakh crore.
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