January 2019
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Financial Inclusion to Financial Transparency – the Road Ahead

we have 25 Crore families in India and roughly 11 crores have at least one bank account in a family

We have 25 Crore families in India and roughly 11 crores have at least one bank account in a family

By Madhukar Swayambhu, Sales Head – India & SAARC at ZyXEL Technology India P Ltd

15th August 2014, Prime minister of India, launched “PMJDY – Pradhan Mantri Jan Dhan Yojna”. In his speech he said, we need to eradicate the economical divide and had appealed to people for opening their bank accounts under the scheme and the banks were instructed to open the accounts with “zero” balance also, but the accounts must be opened for each and every citizen of India.

On the Launch day itself, it created world record – by opening 1.5 million bank accounts in a day. And then there were many other world records to be created. By 28th January 2015, 128 million accounts were opened with a balance of ₹10590 crore or $1.7 billion another two records broken. By 31st of March 2015, the number of account grew to 14.71 Crores or 147 million accounts, with a deposit of ₹15670 crore, yet another record.

Now the government has linked it to all the citizen subsidies that Government gives to the citizens, like subsidy on the cooking gas (LPG), people buy the gas cylinder at the normal rate and the subsidy amount is transferred by the Government in the individual’s account. Even the Government employment schemes wouldn’t be paying cash to any of the daily laborers. Whatever money has to be transferred, it has to go in the account directly. Be it from central or state government or any other government bodies including the public sector undertakings.

Apart from wages & Subsidies, even the government decided pensions for senior citizens would also get transferred in the same accounts. The account would also have insurance cover and overdraft facility for up to ₹5000.00.

it was a government estimate that we have 25 Crore families in India and roughly 11 crores have at least one bank account in a family. There could be those wherein each family member does have his own account, primarily in urban India. Thus this scheme was created in order to have at least 90% families to have at least one account per family by end of 2015. But the success of the scheme was so stupendous that we already have 99% accounts opened against the government estimate.

That was indeed a great step. And ambitious plan, executed wonderfully.

But what’s the next step?

The next obvious step is Financial Transparency.

Financial Transparency – the need of the hour

It’s an irony that a country of 120 crores of population, which gets moved with the very thought of accountability & transparency of a political party, that gives the said party, a clear mandate, throwing away a 15 years old empire of the oldest exiting political party in India, but no one really bothers about the Government’s accountability or transparency.

A population that gets motivated by an election manifesto that promises to get the black money in swis accounts, back to India, doesn’t even care about how the “black money” is generated? Why don’t we get into root causes? Why do we always get satisfied with a superficial, temporary, in complete solutions?

Financial Transparency – the benefits

The Government can and must put a full stop on the root cause of black money generation itself by bringing in financial transparency. So the first and foremost the Black money generation is stopped from the root cause itself.

Secondly, if the money is being collected on taxes, the very fact that the spending is not monitored, every merchant outlet gets into black and white transaction, which causes huge loss of exchequer. The moment the spend is monitored, there won’t be any need of direct taxes at all. All the indirect taxes like, sales tax, service tax, entertainment tax, luxury tax etc. would meet the revenue targets beyond expectations. Like the government’s estimation was exceeded in “PMJDY”.

Thirdly, for each and every individual, organizations and government administration, everyone would be able to track the expense ledger as per their authority rights assigned to them and track the graph of the expense head versus spend. They would also have the liberty to track the expense and modify the way to spend by virtue of the knowledge that they would acquire from this system.

Financial Transparency – the way forward

We need to link up the bank accounts / debit card, with ADHAAR / PAN and a mobile number for making this happen. All the transactions would be through the mobile / debit card. Be it e-commerce or m-commerce, so that there is no cash transaction.

So be it a payment to you auto rickshaw / cab / super market / grocer / vegetable vendor / milk vendor / your house hold maid / metro railway / sweeper / newspaper vendor / telephone bill / electricity bill / society maintenance / dry cleaners / house rent / chemist shop / fruit vendor / tuition fee / school fees / beauty parlor / book vendor / stationery vendor or any other expense that you might think of would all be paid through either mobile or through internet.