Financial Inclusion

The current focus on financial inclusion has opened up solutions to reduce leakages in central and state government schemes. For these solutions to have a sustainable impact, deeper issues in public fund management must be addressed. These issues revolve on three key challenges: "first-mile" problems of transferring central and state funds to local implementation agencies in a timely, efficient and transparent manner; "last-mile" problems of sending benefits to beneficiary or vendor bank accounts without delays; and "beyond-the-last-mile" challenges of ensuring rural beneficiaries have adequate access to remote banking services. This paper reviews these three challenges and proposes a new public finance management system, namely, JAM+. The authors believe that these reforms have the potential to reduce India's fiscal deficit by ₹1 lakh crore.