Roadmap for Digitally Inclusive Bharat : NITI Aayog Report – UPSC GS3

NITI Aayog and Mastercard have released a report titled ‘Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat’.
Purpose of the report: The report identifies challenges in accelerating digital financial inclusion in India. The report also provides recommendations for making digital services accessible to its 1.3 billion citizens.
Key Findings of the Roadmap for a Digitally Inclusive Bharat:
  • Enabling Global Opportunities for MSMEs
    • MSMEs have been a key growth driver for the Indian economy. This sector has employed some 110 million people or over 40% of India’s non-farm workforce.
    • However, the lack of proper documentation, bankable collateral, credit history and non-standard financials force them to access informal credit. Also, the informal credit interest rates are double that of the formal lenders.
    • Suggestion:
      • Digitize registration and compliance processes and
      • Diversify credit sources to enable growth opportunities for MSMEs.
  • Inspiring Trust and Security in Digital Commerce
    • There has been tremendous growth in digital payments in the past few years.
    • However, the surge in digital transactions has also increased the risk for possible security breaches, both for consumers and businesses.
    • A Medici report of June 2020 says 40,000 cyber-attacks targeted the IT infrastructure of the banking sector in India.
    • Suggestion:
      • Build information sharing systems including a ‘fraud repository’.
      • Ensure that online digital commerce platforms carry warnings to alert consumers to the risk of frauds.
  • Preparing India’s Agri Enterprises for Connected Commerce
    • Agriculture with its allied sectors provides livelihood to a large section of the Indian population. Over the years, agriculture’s contribution to national GDP has declined from 34% in 1983-84 to just 16% in 2018-19.
    • However, most agri-techs have not succeeded in digitizing financial transactions for farmers. Also, they failed to enable formal credit at lower rates of interest by leveraging transaction data.
    • Suggestions:
      • Enable agricultural NBFCs to access low-cost capital and deploy a ‘phygital’ (physical + digital) model for achieving better long-term digital outcomes.
      • Digitizing land records will also provide a major boost to the sector.
  • Digital Financial Inclusion:
    • A lot of effort and success has been on the supply side of DFI. For example, initiatives like E-Governance initiatives, JAM trinity, Direct Benefit Transfer(DBT) among others.
    • However, the success in the digital financial flow comes at the last mile where account holders mostly withdraw cash for their end-use.
    • Suggestion:
      • Strengthen the payment infrastructure to promote a level playing field for NBFCs and banks.
  • Robust Transit Systems for Smart Cities
    • The transport sector is expected to grow to 12% of GDP by 2026.
    • Hence, there is a huge opportunity for the government and private sector to collaborate and provide top-quality systems for mass transit.
    • Suggestions:
      • Make city transit seamlessly accessible to all. Transit has to include visitors, migrant workers from towns or villages also. The government can allow price benefits of digital payments to poor citizens
      • Leverage existing smartphones, cards and non-transit payment modes as far as possible.
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