Finance and Opportunity in India

One of the greatest dangers to the growth of developing countries is the middle income trap, where crony capitalism creates oligarchies that slow down growth. If the debate during the elections is any pointer, this is a very real concern of the public in India today. To avoid this trap, and to strengthen the independent democracy our leaders won for us sixty seven years ago, we have to improve public services, especially those targeted at the poor. A key mechanism to improve these services is through financial inclusion. Financial inclusion is about getting five things right: Product, Place, Price, Protection, and Profit: If we are to draw in the poor, we need products that address their needs; products should be easy to access and a place of delivery may today be wide-ranging; the transactions costs of obtaining the product, including the Price and the intermediary charges, should be low; customers will need protection such as under the Consumer Protection code, and lastly financial inclusion cannot be achieved without it being Profitable. (Twentieth Lalit Doshi Memorial Lecture on August 11, 2014 at Mumbai.)