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Reaping India’s digital dividend by
2020
By Ajay Banga, CEO, Mastercard
A lot of the excitement around Digital wider to include the greatest possible
India rises from the promise it holds numbers of the underserved and
for greater empowerment. It opens up unbanked members of society.
the world of financial inclusion to This is not going to be easy. The
millions of Indians who earlier stayed challenge lies in keeping the
below the banking radar.
momentum going. India needs to find
In his Independence Day speech on ways to get the next 200 million
August 15, 2017, Prime Minister Indians to open bank accounts; to
Narendra Modi called it the rise of a transfer wages of millions of farm and
new India. India now has 1.16 billion construction workers through safe and
people with biometric identity cards secure digital channels; to help millions
that are being linked to individual bank of merchants, traders and micro
accounts. In the last couple of years entrepreneurs – who form the
around 290 million new bank accounts backbone of India’s economy – gain
have been opened, most of them zero- financially and become more
balance accounts meant for the productive by adopting digital models.
underprivileged. These bank accounts The digital landscape is huge and
are making it easier for the having taken a few big steps, India
government to directly transfer needs to keep moving towards the end
subsidies and other benefits to the goal. Globally, more countries are
needy. Over a 100 million rural shifting towards cashless payment
employment cards (under the MNREGA models. Netherlands, Canada and
scheme) used by farm laborers have Australia are almost entirely cashless
been digitized, thus allowing payments economies. India, on the other hand, is
to be made electronically, and without amongst the most cash-intensive
systemic leakages. Technology is economies in the world, with a cash-to-
smoothening the path of social GDP ratio of 12%, almost four times
progress.
that of markets such as Brazil, Mexico
Miles to go and South Africa.
And yet the potential for further It is estimated that the Reserve Bank of
inclusion is immense and India can India and commercial banks spend as
reap greater social dividends from its much as INR 22,000 crore on managing
digital mission. The need of the hour is cash. Even a 5 percent growth in
to spread the financial blanket even cashless transactions will save the
