Strengthening digital financial inclusion in payments to women

For over a decade, India’s digital public infrastructure (DPI) has been harnessed for cash transfers to citizens through the Direct Benefit Transfer (DBT) programme. The DBT programme has grown exponentially since the Covid-19 pandemic. Recent studies show that in India and the developing world, government-to-person (G2P) transfers have become a significant factor in women's adoption of financial services. Women’s decision-making powers within their homes improve due to digital G2P payments, which also has a positive impact on their employment, health, and education. But women continue to face barriers in digital access and usage, along with adverse norms, which impacts their digital financial inclusion. Aligning with G20 priorities of financial inclusion and women’s economic empowerment, this policy brief reviews the use of digital technology in G2P payments to women in India, analyse the gaps, and draw lessons for emerging economies. It offers recommendations to the G20 to strengthen digital G2P payment programmes.

In 2013, the Indian government introduced DBT. The programme had a few stated objectives: To reduce fiscal leakages, eliminate corruption, reduce costs, and increase efficiency in the delivery of welfare. It would simultaneously accelerate financial inclusion and social empowerment through transfers made directly into citizens’ bank accounts.

The DBT programme, which has led to savings of ₹2.73 trillion between 2013 and 2022, has grown to cover nearly all welfare schemes by the government, ranging from pensions and wages, to health, education, rural development, housing, and subsidies in food, fuel, and agricultural. More than ₹6.9 trillion was transferred in 2022-23 compared to ₹3.8 trillion in 2019-20, an increase of over 80% cash transfers as cash transfers became a lifeline during the Covid-19 pandemic. India is not alone in this; the pandemic led to the largest scale-up of cash transfers for social protection globally, which were planned or implemented in 186 countries.

DBT has been built on the back of the robust digital public infrastructure (DPI) framework, which has helped India advance its development goals, fast-track financial inclusion, and enable efficient delivery of public services. DPI, which allows for exponential outcomes, has helped India accelerate financial inclusion by four decades.

This feat can be credited to Aadhaar, the foundational building block of DPI, and the largest biometric identification programme in the world. Aadhaar is the central element of the ‘Jan Dhan, Aadhaar, and mobile’ (JAM) trinity, which integrates bank accounts (Jan Dhan) with unique identity (Aadhaar) and mobile technology to form the core structure for direct transfers. Through DPI-based solutions, the gender gap in access to bank accounts has been closed and there has been considerable progress in addressing credit gaps to women entrepreneurs, by prioritising lending to women.

The paper can be accessed by clicking here.

This paper has been authored by Sunaina Kumar from ORF.