Michael Debabrata Patra: Financial inclusion empowers monetary policy

Keynote address by Dr Michael Debabrata Patra, Deputy Governor of the Reserve Bank of India, in the project on Financial Inclusion, a joint initiative by the Indian Institute of Management Ahmedabad (IIMA), Institute of Rural Management Anand (IRMA) and Centre for Innovation, Incubation and Entrepreneurship (CIIE), organised by the Indian Institute of Management, Ahmedabad, 24 December 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Prof. Errol D'Souza, Director, Indian Institute of Management, Ahmedabad or IIMA; Prof. Umakant Dash, Director, Institute of Rural Management, Anand or IRMA; Dr. Supriya Sharma, Partner-Insights, Centre for Innovation Incubation and Entrepreneurship or CIIE; representatives of the Bill & Melinda Gates Foundation (BMGF); faculty, students and staff of IIMA; and friends, I commend all of you on this laudable initiative of Financial Inclusion for Rural Transformation. It raises the bar by seeking to examine the entire value chain of financial inclusion and its effect on women empowerment with the help of research, existing and new data, and field experiments. I look forward to the findings, especially which financial inclusion products work, where and why.

I am honoured to be given the opportunity to launch this project. Drawing from what I do for a living, I thought I will share my thoughts on how financial inclusion empowers monetary policy and why people matter for its effective conduct.

Financial inclusion in the sense of access to the formal financial system for basic financial services at a reasonable cost is now positioned as a policy objective in more than 60 countries. It is also central to the United Nation's (UN's) 2030 Sustainable Development Goals (SDGs) and the G 20's Action Plan on the 2030 Agenda for Sustainable Development. Several direct developmental effects are attributed to financial inclusion such as greater mobilisation of savings, improving conditions for remittances, boosting fiscal revenues and improving the effectiveness of fiscal transfers. Rather than a lever or a growth multiplier, however, it is widely viewed as enhancing the quality of growth by fostering inclusivity and by enabling other developmental goals such as poverty eradication, reduction of inequality and women empowerment, to name a few.