Digital payments are empowering the rural economy

With growing urbanization and widespread access to information, the country has entered into a highly disruptive phase of India’s economic phase. The government must therefore ensure that the benefits of economic growth reach every single citizen of India. According to Forbes World’s Billionaires list 2021, while the number of billionaires is rising, the number of empty stomachs too is increasing. Today, the number of Indian billionaires is at 140, positioned as the third highest in the world behind the US and China. The number rose to 140 this year from 102 in 2020 despite the Covid-19 pandemic shattering the economy and multiplying unemployment.

When we look at the data points of NITI Aayog, even before the pandemic, about 52% of all agricultural households in India were in debt with average outstanding loan amount of Rs 47,000 against the average monthly income of Rs. 6,426 per agricultural household. At the same time, the Ministry of Electronics and IT launched a scheme in rural India, by the title, “Digital Finance for Rural India: Creating Awareness and Access through Common Service Centres”. It aimed at setting CSCs as Digital Financial Hubs, by spreading awareness regarding government policies and digital finance options available for rural citizens.

India, a developing nation, is a country of 1.39 billion people. Out of which, about 65 percent of the population lives in rural India, and 35 percent lives in urban India. The urban centers contribute around 63 percent to the GDP, while around 27 percent contribution comes from the rural economy. The rural population has a significant part to play in the economic development of the country.

Secondly, various key initiatives by the government including Bharat Net Project, a flagship mission promoted by the Government of India is to boost internet services, e-banking, e-governance, and e-education among the rural population. The plan aimed to connect every 2,50,000 Indian Gram Panchayat and offered 100 Mbps connectivity to achieve the same. Besides this, the other schemes which promoted digital literacy and empowerment in interiors of the country included Pradhan Mantri Jan Dhan Yojana, Direct Benefit Transfer, Atal Pension Yojana, and RuPay cards.

At the same time, various fintech start-ups and giant corporations have also contributed in accelerating the digital revolution, especially in rural areas, given the extensive market which rests there. The major part i.e., 65 percent residing in the rural areas, a huge potential is lying in there, which can lead India to achieve its vision of a $5 trillion economy by 2024-25. There is a huge gap that needs to be filled, which we call the “Digital Literacy Gap”.