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Digital Innovations in Public Finance: An Efficient Use of Resources

Author

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  • Chakraborty, Lekha
  • Agarwal, Samiksha

Abstract

Digital innovations in fiscal policy is the du jour for the macro policy makers, especially in the post-demonetisation India. India showcases the early three experiments of digitization in public finance – especially financial inclusion through digital financial services - in the recent Economic Survey. It highlights that digitization in public finance helped the government to identify the beneficiaries correctly given the technology it uses. It also helped in the removal of ghost beneficiaries and thus plugged leakages and identification errors. An early figure suggests that digitization in public finances in India has helped to transfer the benefits of welfare programmes to extent of 41% in MGNREGS, 37% in PAHAL (the LPG subsidy scheme), 14% in National Social Assistance Program(NSAP) and 7% in national scholarship schemes.(Economic Survey of India, 2015-16). Yet another successful experiment in digitization of fiscal policy is the new scheme, Pradhan Mantri Jan Dhan Yojana. It has ensured financial inclusion in financial services through opening savings accounts by the masses so that the money is transferred to the genuine beneficiaries. Another related experiment has been the introduction of Aadhaar cards which provides a unique online identity to each individual in the country and has been linked to bank accounts and mobile numbers in order to ease transactions. Greater use of mobile banking to transfer funds faster and to solve the last mile banking problem has also been encouraged. The use of Jan Dhan accounts, Aadhaar cards and Mobile Banking has helped India take a step closer to the digital revolution that awaits it. Such global experiments of digitization in finance have happened in Kenya, where geospatial surveys were used to decipher how much financial institutions have responded to an increasingly digitizing environment.

Suggested Citation

  • Chakraborty, Lekha & Agarwal, Samiksha, 2018. "Digital Innovations in Public Finance: An Efficient Use of Resources," MPRA Paper 85219, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:85219
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    File URL: https://mpra.ub.uni-muenchen.de/85219/1/MPRA_paper_85219.pdf
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    More about this item

    Keywords

    digital infrastructure ; financial inclusion; Aadhar;

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H61 - Public Economics - - National Budget, Deficit, and Debt - - - Budget; Budget Systems

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