Digital Innovations in Public Finance: An Efficient Use of Resources

Chakraborty, Lekha and Agarwal, Samiksha (2018): Digital Innovations in Public Finance: An Efficient Use of Resources. Published in: Yojana, Government of India journal

Abstract

Digital innovations in fiscal policy is the du jour for the macro policy makers, especially in the post-demonetisation India. India showcases the early three experiments of digitization in public finance – especially financial inclusion through digital financial services - in the recent Economic Survey. It highlights that digitization in public finance helped the government to identify the beneficiaries correctly given the technology it uses. It also helped in the removal of ghost beneficiaries and thus plugged leakages and identification errors. An early figure suggests that digitization in public finances in India has helped to transfer the benefits of welfare programmes to extent of 41% in MGNREGS, 37% in PAHAL (the LPG subsidy scheme), 14% in National Social Assistance Program(NSAP) and 7% in national scholarship schemes.(Economic Survey of India, 2015-16). Yet another successful experiment in digitization of fiscal policy is the new scheme, Pradhan Mantri Jan Dhan Yojana. It has ensured financial inclusion in financial services through opening savings accounts by the masses so that the money is transferred to the genuine beneficiaries. Another related experiment has been the introduction of Aadhaar cards which provides a unique online identity to each individual in the country and has been linked to bank accounts and mobile numbers in order to ease transactions. Greater use of mobile banking to transfer funds faster and to solve the last mile banking problem has also been encouraged. The use of Jan Dhan accounts, Aadhaar cards and Mobile Banking has helped India take a step closer to the digital revolution that awaits it. Such global experiments of digitization in finance have happened in Kenya, where geospatial surveys were used to decipher how much financial institutions have responded to an increasingly digitizing environment.

• Item Type: MPRA Paper
• Language: English
• Keywords: digital infrastructure , financial inclusion, Aadhar
• Subjects: E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E26 - Informal Economy ; Underground Economy; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy; H - Public Economics > H3 - Fiscal Policies and Behavior of Economic Agents > H30 - General; H - Public Economics > H6 - National Budget, Deficit, and Debt > H61 - Budget ; Budget Systems

References

References

Banerjee, Abhijit (2016), Universal Basic Income’, Abhijit Ideas for India, September 27, 2016. http://www.ideasforindia.in/article.aspx?article_id=1695

Bardhan, Pranab (2016), ‘Basic income in a poor country’, Ideas for India,26th September 2016.See http://ideasforindia.in/profile.aspx?id=32

Chakraborty, Lekha 2016a, “Gender Budgeting in Asia: A survey “, Working paper 150, International Monetary Fund, Washington DC

Chakraborty, Lekha (2016b), “Fiscal Consolidation, Budget deficits and Macro economy”, Sage Publications, UK.

Chakraborty, Lekha, (2014). “Integrating Time in Public Policy: Empirical Description of Gender-Specific Outcomes and Budgeting”, Levy Economics Institute of Bard College Working Paper No. 785, New York.

Ghatak, Maitreesh (2016) ‘Is India ready for a universal basic income scheme’, , Ideas for India, 28 September 2016. See http://www.ideasforindia.in/article.aspx?article_id=1696

Government of India, (2017,) “Economic Survey of India, 2016-17”, Ministry of Finance, New Delhi

Government of India, (2016), “Economic Survey of India, 2015-16”, Ministry of Finance, New Delhi

Nilekani (2012), The Report of the Task Force on an Aadhaar- Enabled Unified Payment Infrastructure, February 2012

NIPFP (2012), A cost-benefit analysis of Aadhaar, National Institute of Public Finance and Policy, November 9, 2012, New Delhi

Government of India (2014), “Launch of PAHAL (DBTL) scheme on 1st January 2015 in entire Country”, Press Information Bureau, Ministry of Petroleum & Natural Gas,31 December,2014, New Delhi

Ideas (2016), Ideas for India e-Symposium- The idea of a universal basic income in the Indian context, November 6, 2016

International Institute of Sustainable Development (2014): “Subsidies to Liquefied Petroleum Gas in India: An overview of recent reforms”, IISD, March 2014

Lahoti, Rahul et al (2012), “Subsidies for whom? The case of LPG in India”, Centre for Public Policy, Indian Institute of Management, Bangalore, 2012

Ndung’uNjuguna, Armando Morales, and Lydia Ndirangu (2016), Cashing In on the Digital Revolution, Finance and Development, IMF, June 2016, Vol. 53, No. 2

Ray, Debraj 2016, 'The universal basic share', Ideas for India, 29 September,2016. http://ideasforindia.in/article.aspx?article_id=1697

Saraf, Anupam et al (2016), “Framework for Issuing, Using and Validating Identification Documents”, Economic and Political Weekly, Vol. 51, Issue NO. 42, 15 Oct, 2016