Think Tank (4/2023)
Dr Duvvuri Subbarao
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Seminars by Dr Duvvuri Subbarao
03 Jul 2023
Anthony Toh Han Yang

Dr Duvvuri Subbarao, former Governor of the Reserve Bank of India, and Visiting Senior Fellow at RSIS, gave two seminars titled “Digital Technology Driven Financial Inclusion: Has India Discovered the Holy Grail?” on 3 July 2023 and “India’s Growing North-South Divide – Real or Just a Perception” on 5 July 2023.

Digital Technology Driven Financial Inclusion: Has India Discovered the Holy Grail?
By Anthony Toh Han Yang

The Centre for Multilateralism Studies organised the RSIS seminar titled “Digital Technology Driven Financial Inclusion: Has India Discovered the Holy Grail?” by Dr Duvvuri Subbarao on 3 July 2023. Dr Subbarao discussed how digital technology-driven financial inclusion has revolutionised India’s socioeconomic landscape.

Dr Subbarao began with an account of India’s long-standing struggle to improve its financial inclusion in the past few decades. In 2014, the “JAM Trinity”, a mixture of policies and technological advancements, emerged. The Trinity comprises three parts.  First, “J” stands for “Jan Dhan Yojna”, a financial inclusion programme launched by Prime Minister Narendra Modi in 2014. Second, “A” refers to “Aadhar”, which is a 12-digit identification number used in conducting transactions. Finally, “M” stands for “mobile phones”. An increased number of Indian individuals with mobile phone access have played instrumental roles in fostering greater financial inclusion. He observed that the JAM Trinity has unleashed a slew of highly useful digital innovations such as the Open Network for Digital Commerce (ONDC) which connects buyers and sellers from various parts of the country via a single business platform and the Unified Payments Interface (UPI) which makes financial transactions more convenient through a single QR code.

India’s increased digitalisation has pressed the government to put greater emphasis on anti-money laundering safeguards and consumer protections to ensure that citizens can continue to utilise digital services in a safe and conducive environment. Nevertheless, the country’s success in promoting financial inclusion has attested to its capability to leverage digital innovation to elevate social equality and quality of life. This enables India to lead the discussions about these digital technologies and financial inclusion on the global stage, enhancing its soft power in these areas.

Dr Subbarao cautioned that more work needs to be done. Financial inclusion goes beyond the narrow criterion of having access to the payment systems. It also encompasses opportunities for micro-credits, micro-insurances, and other forms of financial savings. Key challenges facing the future of India’s financial inclusion were highlighted. Among them were an ongoing problem of financial illiteracy, a regulatory dilemma between encouraging innovation and protecting consumers, and gender inequalities in the digital and financial sectors. These issues must be effectively tackled to bolster the country’s financial inclusion going forward.

The seminar ended with a Q&A session where Dr Subbarao engaged in a constructive discussion with the audience on India’s approach towards managing an increased number of regulations in the highly digitalised environment as well as the advantages that ONDC brings to the nation’s e-commerce businesses.

India’s Deepening North-South Divide: Real or Just a Perception?
By Dipinder Singh Randhawa

Is there a growing North-South divide in India and what does it portend for the future of the country? Regional disparities along economic, social, and political dimensions are not uncommon in large countries. Brazil, Nigeria, Germany, Mexico, and Italy are examples of countries with sharp regional differences.  Governments typically address this problem through decentralisation of authority and responsibility, to lower levels. Experience from around the world shows that this has not been an adequate solution to the problem.

Against this backdrop, Dr Duvvuri Subbarao gave a lively and engaging seminar titled “India’s Growing North-South Divide – Real or Just a Perception” on 5 July 2023. When Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) lost the election in the South Indian state of Karnataka in May 2023, many political commentators read that as a North-South divide with the BJP being confined to Northern states while the opposition parties rule the Southern states.

At the very outset ,Dr Subbarao addressed the question of whether the North-South divide was a just a perception or reflected in data. The presentation showed that, contrary to popular perception, regional disparities are a post-Independence phenomenon and have been markedly widening in recent decades. Differences in health indicators, indicators on education, economic indicators, as well as demographic data, reflect widening disparities.

Persistent differences could potentially raise regional tensions, along multiple fault-lines: the growth of Hindutva fundamentalism in large swathes of the North versus pluralism in the South; transfer of resources to the states; the possible reallocation of parliamentary seats in accord with population levels, larger per capita transfers from the Federal Government to Northern states vis-à-vis Southern states which entails an element of cross subsidisation. While such trends may be common to most, if not all federal polities, the deepening North-South disparities in India raise concerns about tensions in the future. Addressing these potential tensions is critical to India’s aspiration to move up the middle-income trajectory with widely shared prosperity.

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