Financial Inclusion

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The five-year track record of NDA govt's financial inclusion drive

SBI Chairman Arundhati Bhattacharya. Photo: PTI

Regulators team up for financial inclusion

Small finance banks seek relaxed norms to meet financial inclusion goals

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Tribal ministry relents over Forest Rights Act

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	Financial inclusion is a method of offering banking and financial services to individuals. It aims to include everybody in society by giving them basic financial services regardless of their income or savings. It focuses on providing financial solutions to the economically underprivileged. The term is broadly used to describe the provision of savings and loan services to the poor in an inexpensive and easy-to-use form. It aims to ensure that the poor and marginalised make the best use of their money and attain financial education. With advances in financial technology and digital transactions, more and more startups are now making financial inclusion simpler to achieve.</div>
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	<strong>Financial inclusion definition</strong></div>
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	Financial inclusion is the process of ensuring access to financial products and services needed by vulnerable groups at an affordable cost in a transparent manner by institutional players.</div>
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	<strong>When was financial inclusion concept introduced in India?</strong></div>
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	The concept of financial inclusion was first introduced in India in 2005 by the Reserve Bank of India.</div>
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	<strong>Objectives of financial inclusion</strong></div>
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	The objectives of financial inclusion are to provide the following:</div>
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		A basic no-frills banking account for making and receiving payments</li>
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		Saving products (including investment and pension)</li>
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		Simple credit products and overdrafts linked with no-frills accounts</li>
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		Remittance, or money transfer facilities</li>
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		Micro insurance (life) and non-micro insurance (life and non-life)</li>
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		Micro pension</li>
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	<strong>Financial inclusion in India</strong></div>
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	<strong>PMJDY: </strong>Around 192.1 million accounts have been opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY). These zero-balance bank accounts have been accompanied by 165.1 million debit cards, a life insurance cover of Rs 30,000 and an accidental insurance cover of Rs 1 lakh.</div>
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	Other than PMJDY, there are several other financial inclusion schemes in India &mdash; Jeevan Suraksha Bandhan Yojana, Pradhan Mantri Vaya Vandana Yojana, Pradhan Mantri Mudra Yojana, Stand Up India scheme, Venture Capital Fund for Scheduled Castes under the social-sector initiatives, Pradhan Mantri Suraksha Bima Yojana (PMSBY), Atal Pension Yojana (APY), Varishtha Pension Bima Yojana (VPBY), Credit Enhancement Guarantee Scheme (CEGS) for scheduled castes, and Sukanya Samriddhi Yojana.</div>
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	<strong>Why is financial inclusion important?</strong></div>
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	Financial inclusion strengthens the availability of economic resources and builds the concept of savings among the poor. Financial inclusion is a major step towards inclusive growth. It helps in the overall economic development of the underprivileged population. In India, effective financial inclusion is needed for the uplift of the poor and disadvantaged people by providing them with the modified financial products and services.</div>
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What is Financial inclusion, Financial inclusion Definition, Financial inclusion News

What is Financial Inclusion

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	Fiscal policy, in simple terms, is an estimate of taxation and government spending that impacts the economy.</div>
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	<strong>Types of fiscal policy</strong></div>
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	There are two types of fiscal policy:</div>
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	<strong>Expansionary fiscal policy:</strong> This policy is designed to boost the economy. It is mostly used in times of high unemployment and recession. It leads to the government lowering taxes and spending more, or one of the two. The aim is to stimulate the economy and ensure consumers&#39; purchasing power does not weaken.</div>
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	<strong>Contractionary fiscal policy: </strong>As the term suggests, this policy is designed to slow economic growth in case of high inflation. The contractionary fiscal policy raises taxes and cuts spending.</div>
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	<strong>What are the tools of fiscal policy?</strong></div>
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	There are two key tools of the fiscal policy:</div>
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	<strong>Taxation:</strong> Funds in the form of direct and indirect taxes, capital gains from investment, etc, help the government function. Taxes affect the consumer&#39;s income and changes in consumption lead to changes in real gross domestic product (GDP).</div>
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	<strong>Government spending: </strong>It includes welfare programmes, government salaries, subsidies, infrastructure, etc. Government spending has the power to raise or lower real GDP, hence it is included as a fiscal policy tool.</div>
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	<strong>Fiscal policy objectives</strong></div>
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	Some of the key objectives of fiscal policy are economic stability, price stability, full employment, optimum allocation of resources, accelerating the rate of economic development, encouraging investment, and capital formation and growth.</div>
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	<strong>Who sets fiscal policy?</strong></div>
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	In India, the Union finance minister formulates the fiscal policy.</div>
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	<strong>What is the importance of fiscal policy?</strong></div>
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	Fiscal policy is a crucial part of the economic framework. In India, it plays a key role in elevating the rate of capital formation, both in the public and private sectors.</div>
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	The fiscal policy helps mobilise resources for financing projects. The central theme of fiscal policy includes development activities like expenditure on railways, infrastructure, etc. Non-development activities include spending on subsidies, salaries, pensions, etc. It gives incentives to the private sector to expand its activities.</div>
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	Fiscal policy aims to minimise income and wealth inequalities. Income tax is charged on all salaried persons directly proportioned to their income. Likely indirect taxes are also more in the case of semi-luxury and luxury items than that of necessary consumable items. In this way, the government generates a good amount of revenue and that also leads to a reduction in wealth inequalities.</div>
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	A prudent fiscal policy stabilises price and helps control inflation.</div>
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	Fiscal policy planning gives the larger chunk of funds for regional development so as to achieve a balanced regional development. It aims to reduce the deficit in the balance of payment.</div>
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	<strong>Difference between monetary policy and fiscal policy</strong></div>
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	Monetary policy is concerned with the management of interest rates and the total supply of money in circulation. It is generally carried out by the RBI.</div>
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	Fiscal policy, on the other hand, estimates taxation and government spending. It should ideally be in line with the monetary policy, but since it is created by lawmakers, people&#39;s interest often takes precedence over growth.</div>

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What is Fiscal policy, Fiscal policy Definition, Fiscal policy News

Fiscal Policy

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	Central welfare schemes, implemented by the government to provide financial and other aids to individuals who cannot support themselves, can be categorised into two sections &mdash; centrally sponsored schemes and central sector schemes.</div>
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	Centrally Sponsored Schemes (CSS) are those schemes which are implemented by the state government but sponsored by the central government with a defined shareholding. At present, there are 30 centrally-sponsored schemes but these are umbrella programmes and they have many sub-schemes under them. The funding is borne by the states in the ratio of 50:50 or 90:10 or 75:25 or 70:30.</div>
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	These schemes are aimed at supplementing efforts undertaken by the state government because the central government has more resources at its disposal. These schemes can either be national or regional in character. In CSS, the funding by the central government works as an initiation, with further spending coming from states towards the cause.</div>
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	<strong>What is the difference between central sector schemes and centrally sponsored schemes?</strong></div>
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	Central sector schemes are implemented by the central government and the budget or financing needed for the scheme is entirely sourced by the central government. By comparison, the implementation of a centrally sponsored scheme is done by state governments. For example, the Mahatma Gandhi National Rural Employment Generation Scheme is a centrally sponsored scheme, while the National Rural Health Mission is a central sector scheme.</div>
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	Centrally sponsored schemes can be further divided into two sections &mdash; core of core schemes and core schemes. Green Revolution, White Revolution, Blue Revolution, Pradhan Mantri Gram Sadak Yojana, Pradhan Mantri Krishi Sinchai Yojana, Pradhan Manti Awas Yojana, Swachh Bharat Mission, Mid-day meals in schools and National Livelihood Mission are some core schemes. Core of the core schemes, on the other hand, include the umbrella scheme for development of scheduled castes, umbrella scheme for development of minorities, and the Mahatma Gandhi National Rural Employment Generation Scheme. Core of core schemes are implemented for social inclusion and social protection, and they are fully funded by the central government.</div>

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What are Centrally sponsored schemes, Centrally sponsored schemes Definition, Centrally sponsored schemes News

Centrally sponsored schemes

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	Central plan of the Union Budget is also called the annual plan. The five-year Plan is split into five annual parts and the government hopes to achieve the objectives of the five-year Plan using the central plan. The funding provided to the Central Plan by the Union government is known as Budget support. The extra-budgetary resources required for the Central Plan come from public enterprises.</div>
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	The Central Plan outlay goes to different sectors like energy, transport, social services, general economics services, communications, science and tech, rural development, irrigation, etc.</div>

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