A Comparative Study of Financial Inclusion & Digital Financial Inclusion in India in the wake of Demonetization and COVID-19 Pandemic

Abstract

Purpose: The Economic Growth of a country depends largely upon its financial sector
which in turn depends upon how well it has reached to their citizens. The country where
all the people are included in its formal financial sector or are part of it, would be on the
path of inclusive growth. The term financial inclusion is what that helps a country in not
only reducing the level of poverty by timely providing adequate and affordable financial
services to all, but would also help in achieving sustained inclusive growth. Thus, financial
inclusion plays an important role in country’s financial well-being. This study provides an
insight on the current status of financial inclusion initiatives with special reference to the
landmark policy Pradhan Mantri Jan Dhan Yojana(PMJDY). The study also examined the
digitalisation of financial inclusion plans where digital technology is being used to further
strengthens the financial inclusion success. In addition, the study also provides a glimpse
of digital transaction during pre and post demonetization time period and evaluated how
COVID-19 pandemic has affected this digitalisation process over pre and post pandemic
situation. The study is based on the secondary data collected from published reports of
RBI, NPCI, Digidhan dashboard, ACI Worldwide, articles, websites and reports submitted
by different committees on digital transaction over different time periods. The objective
of the study is to assess the current status of financial inclusion initiatives in India with
special reference to PMJDY and to evaluate the impact of Demonetization and COVID-19
pandemic on financial inclusion by mediating digital financial inclusion.

Methodology: The current study is descriptive and analytical in nature for which the data
has been collected from various secondary sources which includes published annual reports
of Reserve Bank of India(RBI), Pradhan Mantri Jan Dhan Yojana(PMJDY), National
Payments Council of India(NPCI) for different time periods pertaining to demonetization as
well as COVID-19 and digitalisation. The data has also been extracted from various websites,
journals and articles in newspapers, committee reports of financial regulatory authorities
submitted to the Government of India on digital transactions and financial inclusion in pre
and post demonetization and COVID-19 pandemic era.