In my previous post I had given a background on the Indian financial services. Let me talk about from an Indian context point of view

The Indian context
Before a strategy for delivery of ICT enabled rural financial services is articulated it is important to be aware of the context in which these services are planned to be delivered. Some the key aspects of the Indian landscape are as follows:

a. India has a population of over 1.1 billion people with approximately 70% living in rural areas and the rest living in densely populated urban centers.

b. There are 600,000 villages spread out within over 6,000 blocks and 600 districts. The average population per village is about 2,000 people giving about 200,000 individuals per block and 2 million people per district.

c. The average size of each household is 5 individuals. This implies that there are approximately 200 million households in the whole country.

d. More than 70% of the total working population is engaged in agricultural activities of which about 80% are small and marginal farmers. More than 90% of the working population falls in the unorganised sector earning very low wages and not covered by any social security net .

e. The country is divided into 29 states. There is an enormous amount of variation in the development and growth status between these states. While states like Punjab, Gujarat and Maharashtra demonstrate per capita Gross State Domestic Product of Rs.15000 (USD 300) and above, Bihar, Uttar Pradesh and Orissa have less than Rs.5000 (USD 100). Similar variations can be observed for health and education indicators as well.

f. India accounts for a large portion of the world’s disease and malnutrition burden. Over one-third of the world’s chronically poor live in India. India accounts for 23% of world child death, 20% of maternal death, 30% of tuberculosis cases and 40% of undernourished children. It also has one of the highest rates of low birth weight (LBW) incidence with 67.2%8 due to growth retardation in the womb.

g. Around 34% of the country’s population is illiterate. Although efforts are being made to improve literacy rates, there are major gaps in the areas of universal enrolment and retention of students in schools.

h. About 25% of the total rural population does not have access to safe drinking water, 55% of them do not have electricity in their homes and 40 % of the villages in rural India are not connected by metal roads.

Based on the above in your face statistics, In my opinion the available sources for financial products for the poor clusters in rural areas today are:
- Credit Societies
- Co-operative Banks
- Nationalized Banks
- Private Banks
- Informal loans

And some of the major challenges which intermediaries (Local Financial Institutions) face today in India are:

The supply dilemma:
The exclusion of large numbers of the rural population from the formal banking sector may be for several reasons from the supply side:
(a) Persons are un-bankable in the evaluation/perception of bankers
(b) The loan amount is too small to invite attention of the bankers
(c) The person is bankable on a credit appraisal approach but supporting the accounts and expanding branch network is not feasible and viable
(d) High transaction costs particularly in dealing with a large number of small accounts
(e) Lack of collateral security
(f) Inability to evaluate and monitor cash flow cycles and repayment capacities due to information asymmetry, lack of data base and absence of credit history of people with small means
(g) Human resources related constraints both in terms of inadequacy of manpower and lack of proper orientation/expertise
(h) Adverse security situation prevailing in some parts of slums and other such localities

The demand dilemma:
There are several reasons for the rural poor remaining excluded from the formal banking sector:
(a) High transaction costs at the client level due to expenses such as travel costs, wage losses, incidental expenses
(b) Lack of awareness and lack of social capital
(c) Non-availability of ideal products
(d) Hassles related to documentation and procedures in the formal system
(e) Easy availability of timely and doorstep services from money lenders/informal sources and
(f) Prior experience of rejection by/indifference of the formal banking system.
Hope this info was useful. Will continue with the ICT in rural financial services with some more in-depth insights keep watching this space. Cya !!

Let me begin by quoting a anonymous person but a relevant quote as far as ICT in India in concerned: “Liberalization without regulation is like kids playing football before you have the referee and the playing lines.” – anonymous

ICTs are transforming the way life goes about. They have a huge potential to transform the paradigms of governance. ICTs entail connectivity and networking thereby making the delivery of services offered by governments better. While talking of governments, local self-governments deserve maximum attention as they are at the cutting edge and immensely affect the daily lives of citizens.

Financial Information Network & Operations (FINO) being a sectoral resource in India is playing a major role in the ICT based rural financial delivery for which we were even awarded by the financial times recently.
FINO conducted a primary research on ”Understanding the ways in which rural and urban low-income households access and use financial services from formal and informal providers, including microfinance providers”. Our work involves

Investigating ways in which the use of technological solutions to enable various aspects of financial service delivery can result in cost-effective and scalable operations for providers and cheaper, better quality finance for the poor. To this end, we are working on understanding the Financial, Social and Usability factors involved for effectively deploying technologies to improve financial service delivery to the micro poor clients.

Background
In my opinion one of the most important issue that we face today as a country is the extreme poverty within which almost a quarter of our population lives and the very vulnerable status of almost an equal number, giving over 700 million people who are forced to live well below the level at which they could become active participants in the larger economy.
Concern: Though high GDP growth rates would definitely help reduce this number, the main concern is that causality could actually be working in the reverse direction and that it could prevent the economy from realizing its full potential
1. Mainly on account of existence of large poverty levels
2. Associated deficiencies in the health and educational sectors can lead to retarded growth rates

Belief: The poor already have a keen sense of the manner in which many of the challenges that they face may be best addressed. Therefore instead of trying to push poorly designed subsidised services at the poor they can be given the means to better realize their aspirations on their own terms. Through an improved access to high quality financial services the poor should be able to find their own way out of the “poverty trap” Through the means of such improved access.

What is Improved access: It is defined as the ability of economic participants (individuals and enterprises) to obtain a broad range of financial services (including savings, investments, money transfer across geographies, loans, insurance services and hedging instruments against price fluctuations) suited to their specific requirements to manage price, yield and other risks that affect the income of the household, as also expenditure, with ease and at reasonable prices.

Access to finance: It leads to improvement in individual productivity because it permits:
1. Higher levels of consumption for basic items
2. Investment in education and
3. Skill building : specialization in a few activities instead of over diversification
4. Improvement in risk taking ability.
5. Positive effects on the local economy through a general increase in wage labour opportunities and better utilization of surplus labour

Demand V/s Supply
However, I also feel that the scenario of supply of formal financial services within India is $200 to $300 million against an estimated demand for credit ranging from $3 to $9 billion annually the formal sector is barely able to provide; less than 20% of rural populations have a bank account (contrasted with a figure of over 100% for urban populations); against a total of over 600,000 villages there are barely 30,000 bank branches and while products such as health insurance are completely inaccessible to the poor even the most basic life and accident insurance products remain out of reach. It is entirely possible that the 700 million people that were referred to earlier have never been to bank, have never bought any insurance product and have been completely dependent on uncertain and very limited supply of credit, savings and money-management services made available by the informal sector at exploitative and usurious rates.

I have tried to cover some insights regarding the whole electronic banking system in this post. Have a look

Electronic Banking Environment
The environment for electronic banking is influenced by:
1. Evolution of the financial and retail sectors
2. Levels of financial literacy
3. Supportiveness of the regulatory and policy environment.

Financial and Retail market’s evolution
Electronic banking initiatives are more likely to succeed in evolved financial and retail markets..There are a number of reasons for this. Since scale is required to cover costs, the business case for electronic banking in developing countries becomes stronger with the significant fall in the price of ATMs and POS devices and improving communications infrastructure. With scale come a number of advantages:

• When there are a large number of card (or other solution) users in a population the problem of financial illiteracy is significantly reduced since, for example, children teach their parents how to use the card.
• Initial concerns relating to trust are likely to be overcome.
• The case for merchants to hold POS devices improves as the volume of cards in circulation grows.

Clearly the scale of operation increases the case for interoperability and as financial and retailer infrastructure develops, markets become more attractive.
Financial literacy for the users
Marketing electronic banking for the poor involves more financial education compared to other products and services. To benefit from the solution, users need to understand:
• How to use the cards. It is important to ensure that customers are familiar with the multiple ways in which a card may be used than to simply increase the number of card holders.
• Where to use the cards. Clear branding that is easily communicated to both literate and non-literate clients is a prerequisite to informing customers where the cards can be used.
• What to do when things go wrong. When service delivery fails, clear instructions need to be given on how the expected service can be obtained, for example, through the provision of a call centre number or a location guide to ATMs in a particular area.

Financial institutions have developed a number of innovations to assist their customers to access services. Providing training and support materials to merchants offering POS devices can help them to assist customers.

Commercial Banks: What they doing?
• Commercial banks see an opportunity for volumes business in microfinance and look to tap into the savings and credit appetite / potential of rural India
• They are fast building the infrastructure they need to reach out to the remote pockets
• Commercial Banks are now building partnership models with the MFI organizations

MFI: What they are doing?
Micro-finance companies need to automate their work through use of ICT where possible in order to increase efficiencies and bring down transaction costs and hence compete with the big banks.

Where are Microfinance organizations lacking?

They do not seem to be attacking the problem of transaction costs and are instead achieving improvements in efficiency of operations, accuracy of transaction record maintenance or transferring the costs to some other entities in the system. Even when we take the non-strategic perspective, the pilot projects that are put in have not sufficiently addressed the issue of deploying the right solutions: these act as a dampener for large scale rollouts in MFIs and prevent the achievement of the intended benefits.

I will like to conclude by saying that looking at the geographic distribution and the more than 55% - 65% of the population being unbanked in India, contact based biometric enabled smart cards with higher programming capabilities working on an offline mode/Authentication Devices/POS being operated in a fully secured environment under a bank partnership model or with transactional enablement’s in place in the field seems to the way forward.

Happy reading the FINO Koshish blog. Cya

In my previous post I tried to explain about the challenges facing the Microinsurance sector in INDIA. Let me stress on how we plan to take it within FINO.

Given the deep understanding of the customers from bottom of pyramid, We at FINO understand the existing bottlenecks in proliferation of micro insurance and the practical ways to overcome them.
We launched FINO SURE – Insurance services for the low income group, with following inherent leverages:
• Leverage of group
• Leverage of Institutions and systems
• Leverage of transactional infrastructure
• Leverage of technology – instant & paperless process
Having an affinity group of large base of low income group customers keeping in mind the following key points

Some key points
1. The facility of Insurance – both Life (pure term life) and General (Group personal accident),
2. provision of instant and paperless enrollment,
3. along with meeting the underwriting requirements.
FINO has selected one life and another General Insurance company for providing the customized product to their group of customers – on voluntary basis.

Looking at the practical requirements of the customers, We offered Life term plan (i.e. pure risk cover) of Rs. one lakh sum assured and Group Personal Accident (GPA) of Rs. 50 thousands and 1 lakh of cover. Thus, at one end the sum assured is as per the defined microinsurance limit (Rs. 50,000), but at the same time looking at the current basic financial needs of low income customer in hour of needs, it has also provided a cover of Rs. 1 lakh as selling large quantities of insurance that costs very little and provides little benefit has limited value, no matter how widely it is sold.

Another very important aspect of FINO SURE is the fact that the 10,000 strong agents (called “bandhu”) are very well trained in Insurance , who in turn reaches to all their customers in rural and under banked areas and sensitize them on the need of Insurance, thus elevating the level of financial literacy for the much needy section of the society.
Our product has penetrated to 14 districts like Bijapur, Gulbarga, Kolhapur, Rewa, etc. and has covered successfully 5000+ lives in the first phase, which is targeted to escalate to more then 100 districts in the next phase of launch.

I will be happy to answer any queries the readers have on this post. Haapy reading FINO Koshish Blog.

Continuing from where I left off in my last post below are more points that an institution will look at with respect to electronic banking solution. Check my earlier post for the first 3 points. Here Is a continuation of the same

4. Increasing efficiency of operations.

Electronic banking can significantly increase the efficiency of transaction processing.

5. Controlling development costs.

Any technology-based project is at risk of significant cost overruns and electronic banking is no exception.

• Cost dynamics are changing with the introduction of low-cost ATMs.
• Nature of the relationship that a financial institution has with the developer of an e-banking solution.eg Teba Bank in South Africa developed its systems through a joint venture agreement with its solution providers, and this seems to have resulted in a feature- rich product managed with careful cost control

6. Distribution. Crafting

A distribution strategy is at the heart of the any electronic banking solution. A number of factors influence the distribution strategies.
• Technology costs, communications costs are falling. The latest generation of POS devices can be battery operated and operate on GSM (Global System for Mobile communication) networks. This allows POS devices to reach much more remote areas.
• More and more major banks are upgrading their acquiring infrastructure (ATMs and POS devices).
• It is increasingly possible to sell a range of products from a single POS device. This changes the economics of the merchant hosting the device and may increase the profitability for the bank providing the device.
A host of questions needs to be answered before an appropriate distribution strategy can be designed.
• What type of infrastructure can be put in place?
• Where the infrastructure should be placed?
• How should infrastructure development be phased?
• Should distribution be fully or partially outsourced, can the infrastructure be franchised?
• Should the solution be online or offline?
• Is there a sufficient business case for each partner in the distribution infrastructure?
Unfortunately there is no one correct answer to these questions as the answers depend on many inter-related factors including the competitive environment, the availability of technical resources, the availability of capital and the strength of the different business cases.

7. Partnerships.

Except perhaps for the larger banks or in the case of solutions with tightly defined functionality, e-banking solutions require a partnership approach to achieve scale (see Table 4).
Partners in an e-banking solution include,
1. Application service providers
2. Banks
3. Communications providers
4. Merchants
5. Government departments
6. Post offices and/or post banks
7. Microfinance institutions
8. Petrol stations
9. Transaction processors etc.

A critical partnership is that between the IT system developer and the host bank. A vendor relationship with the developer is transient, and the vendor and the host financial institution can have very different objectives.

8. Developing multiple business cases. Each partner in an electronic banking solution has to have a firm business case in favour of the solution. While providing a service that the end user values, the financial institution must satisfy the requirements of a range of different partners each requiring slightly different benefits from the electronic banking solution.

Happy Reading the Koshish Blog

Having touched upon the Customers perspective in my last post let me now touch on the institutional perspective of the Electronic Banking Solution

In my view from an institutional perspective, the electronic banking solution should increase profitability. This means careful consideration of
1. Functionality
2. Building volume through segmentation
3. Fees and charges
4. Efficiency
5. Controlling
6. Development costs
7. Distribution channels
8. Partnerships and
9. Developing multiple business cases.

1. Functionality

“One debate is then whether to provide a low-cost, lower-featured product to prevent cannibalization of services targeted to the high-value market, or whether to provide a feature-rich product whose profits are driven by lower fees but relatively higher transaction volumes.”

There is a continuing debate over the level of functionality that should be provided by electronic banking solutions. Established commercial banks have an incentive to maintain the status quo. it is the newer banks with a lower investment in physical infrastructure who stand to benefit more from falling development costs for back office systems and the rapidly reducing cost of communications, of ATMs and of POS devices. One of the key features is that it will be accessed through a card which can be used on any of the ATMs of any of the participating banks, using the same pricing, i.e., no additional switching costs. The assumption of the big banks is that one cannot profitably provide a cheap product with high functionality to the low-income market.

2. Segmentation

Segmentation within an e-banking initiative is a key to profitability. Segmentation implies using the e-banking platform to sell differentiated services to different groups of customers. Segmentation allows financial institutions to match customers with optimal products and delivery channels. Have a look at the table below.

Some of the most obvious segments include:
• Own customers. An existing customer base is the most obvious market segment for electronic banking. Clearly, extending electronic services to existing customers risks cannibalizing existing products and services. Against this, is the expected benefit to be gained from decongesting banking halls and processing transactions at lower cost.
• Distributors. Business-to-business use of electronic banking allows the transfer of value between distributors and their customers, without the physical transfer of cash. This considerably reduces the risk to distributors.
• Loyalty cards. Fuel companies are the most obvious customers for loyalty cards. The fuel card is usually either co-branded with the financial institution, or simply branded by the fuel company. The fuel company is normally the issuer of the card to the public. The e-banking platform is also used to transfer funds between the fuel company and its distributors as each fuel delivery is made.
• Government. Governments make a number of transfer payments, e.g. pension and benefit payments. In South Africa and many other countries including India, pensions are already being paid to more than 5 million clients through smart cards.
• Corporate salary payments. Given falling ATM prices, employers in Africa are being targeted for a new service – on-site payroll processing through ATM machines.
• Community phones. Community phones take mobile phone technology into communities, usually under the brand of the mobile telephone company. For example, mobile franchisee kiosk operators can deposit funds in their ABC Bank-Card accounts in Post Offices, ABC bank branches and major supermarket chains and can top up their airtime at any time.
• Microfinance/Credit Union Cards. Microfinance programmes or credit unions can operate an advanced electronic solution through partnership with a financial institution, or through a collective approach which is being actively pursued in India by Banks.

3. Fees and charges.

Modeling the success of an e-banking product depends on accurately predicting the behaviour of customers towards the product. Assumptions must be made by each segment for ATM usage, POS transactions, the percentage of transactions that are on our network, that are off our network, etc. The challenge is that many variables are difficult to predict before the solution is in operation, at which time considerable sunk costs have been invested.

“Appropriate Technology (AT) connotes technology that is relevant to the prevailing situation. AT contributes to the social-economic development whilst ensuring optimal utilization of resources and minimum detriment to environment.”

With the majority of India’s poor residing in the rural areas, attempts to build a sound financial system have understandably had a rural focus which clearly is a leap in the right direction

Financial Services: Need and Role
Well the answer to this is easy with primary need of financial services for the rural masses being poverty alleviation and providing overall development / empowerment opportunities to the lower strata of society. One can find a network of state-owned commercial banks, regional banks, cooperatives, credit societies and microfinance institutions aimed at building a comprehensive financial services offering to the financially weaker segments.

However, I also feel that the intended benefits have never percolated to the target segments with the poor still lacking access to credit (subsidized or on par with their financially better-off counterparts), and suffering usurious interest rates from moneylenders who still dominate rural India.

IT solutions: Trump Card
The use of IT solutions for providing banking facilities at doorstep holds the potential for scalability of the FI initiatives. There are a number of options facing institutions thinking about investing in electronic banking for the mass market. Here is quick snapshot

1. Personal Digital Assistants (PDAs). PDAs are small hand-held computers that can run specialized programmes to manage MFI and client records.

2. Automated Teller Machines (ATMs). These are associated with magstripe or smart cards. ATMs can be fully functional teller machines that accept deposits, dispense cash and can be programmed with other functions. Or they can be cash dispensers only. ATMs are expensive to own and operate but offer the financial institution a much cheaper way of processing a large volume of withdrawals than through over-the-counter operations. ATMs are typically online, and therefore require reliable and affordable communications and power.

3. Magstripe cards Debit cards, often based around magnetic stripe technology, allow customers online access to their accounts through a network of POS (point-of-sale) devices and ATMs. The principle advantages quoted by proponents of magstripe cards are low price and the requirement that transactions are performed online.

4. Smart cards Smart cards have a machine-readable chip embedded in the card. This chip is able to store detailed transaction records offline and perform transactions without a link to the customer’s account. The principle advantages quoted by proponents of the smart card are security and offline functionality. Biometric security allows a cardholder’s picture and fingerprints to be stored on the card and are also used to identify the user. Eurocard, MasterCard and Visa are currently introducing a new standard (called EMV) whereby all Visa, MasterCard and Eurocard branded cards will be issued with a magstripe and a smart chip.

5. Mobile phone banking The phenomenal expansions of mobile phone networks provide an opportunity to operate virtual bank accounts through mobile phones, either through menu-driven systems or through SMS (short message service, or text messaging) technology.

Below is a quick roundup.

• Pilot projects have been initiated using smart cards for opening bank accounts with bio metric identification. Link to mobile or hand held connectivity devices ensure that the transactions are recorded in the bank’s books on real time basis.

• Some State Governments are routing social security payments as also payments under the National Rural Employment Guarantee Scheme through such smart cards. The same delivery channel can be used to provide other financial services like low cost remittances and insurance.

• The use of IT also enables banks to handle the enormous increase in the volume of transactions for millions of households for processing, credit scoring, credit record and follow up.
In my next post I will talk about the value proposition from a customers perspective on the above IT solutions for the Financial Inclusion. Keep watching the FINO Koshish Blog for more from me

March 2010 marked the launch of Fino MITRA, end to end mobile banking solutions for the Fino customer. Currently the services are offered for Mumbai customers. The products supported through this capability are savings, loans and remittances.

• Mobile banking registration on POT with 4 digit security PIN
• Text/Voice alerts language preference can be selected on the POT
• Customer initiated account inquiry via : IVR [Phone Banking], text sms and JAVA application

Advantages of FINO Mitra and its capability
• Mobile channel will be available 365 days, 24 hours, 7 days a week
• For Fino customers it is empowerment in terms of accessing their bank account anytime, anywhere on the move.
• For the Bandhus, the model can be used to divert routine customer transactions and inquiries
• Strengthens customer trust since he is receiving a direct communication from Fino on his mobile
• The model offers tremendous capability as a channel in terms of support for scale up for high volume transactions at the least possible cost
• The model has been specifically customized to suit the base of the pyramid customers

Fino’s Shivaji Nagar Branch was a hub of activity, when all the bandhus and branch managers from Mumbai were given training on Fino – Mitra at one go

Registration of first 5 customers for FINO – Mitra services

Transactions through mobile:
FINO-MITRA:
FINO-MITRA (Mobile Based Information and Transactions), a comprehensive set of end-to-end offerings for enabling microfinance initiatives leveraging mobile as a platform for better mobile banking services to customers.
Services:
 Covers the entire range of services starting from operational tasks such as enrollment to complex transactions such as mobile commerce.
 Caters to the needs of the agents/ middlemen as well as the end users.
 Agents are offered Mobile Based Enrolment as well as Mobile Based POT.
 End users are offered Mobile Banking, Mobile e-wallet, M-commerce thus completing the solution ecosystem for enabling financial inclusion using mobile as a platform.

Mobile Banking Strategy and Approaches:
The mobile banking strategy has 2 approaches
 Mobile banking for agent.
 Mobile banking for customers.

Sustainability of Mobile Banking among the pyramid customers:
Initiatives to be seen to create a sustainable model are:

Robust Partnership:
 Using mobile phone as a channel for financial inclusion is definitely the way ahead due to the vast reach of the telcos irrespective of varied geographical locations and diversities
 A Telco-Business Correspondent alliance will go a long way in developing banking and financial solutions for the unbanked customer
 The private sector and government too needs to come ahead and support the Business Correspondents in their initiatives
 Once the market is tapped and the model of financial inclusion becomes scalable, all the stakeholders would benefit in the form of new revenue channels

Innovative models:
 Since conventional modes of communication like a text sms do not work for base of the pyramid customers, newer modes of communication like voice alerts and IVR need to be looked at
 Since the customer already knows how to receive a call, receiving a voice alert on his mobile phone will be easier for him
 Further sending a voice alert in a regional language will be a value addition and help in building the trust of the customer
 IVR, being a self help channel, the customer can inquire/transact using his mobile phone/landline/PCO at his convenience
 The customer can choose to communicate in his preferred language while using the IVR solution

Simple and Cost Effective Solution:
 Developing solutions for the base of the pyramid customers is no rocket science.
 The above information can be leveraged in developing a simple user experience for the end customer using mobile phone as a channel. Partnerships with educational institutions/research organizations can further enable organizations to strengthen their understanding of base of the pyramid customers
 Further it is important to understand that base of the pyramid customers do not have the ability to pay for expensive solutions, given the fact that they lead a hand to mouth existence. However they have a good savings habit, even thought the savings amount may be a meagre Rs.5/- to Rs10/-

Training and Financial Literacy:
 Once it is known what works for the bottom of the pyramid customers a business correspondent can use its existing agent network to train the customer on the use of mobile technologies
 Financial literacy in terms of giving information about banking products and saving and investing can be carried out using voice technology and IVR, in addition to agent as a medium

Also, note that there always exists a financial need for the financially excluded customer, however difficult to match a banking product to address that need. This brings out the fact that more and more products tailor-made for financially excluded customer need to be in place. (For eg: No Frills savings account).

Analyzing Government of India’s (GoI’s) annual budget is a challenging endeavor due to tapestry of flavors associated most of which are usually ideologically inclined and thus attracts a multitude of appreciation and flak simultaneously. Indian Budget 2010 pertains to social and financial inclusion of poor with a tinge of reforms.

Continuing the Vision:

• The budget 2010 maintains continuity of GoI’s vision of “prudential reforms” oriented economic growth with social equity.
• It reinforces GoI’s hybrid approach towards economic growth and social development along with a perceptible mix of welfare economics and neo liberal proclivity.
• This is in addition to the policy support for good governance initiatives like UIDAI and Technology advisory group for unique projects (TAGUP).

Flavors of Welfare State and Neoliberal Proclivity:

The USP of budget is a clear cut limelight on aam aadmi, mazdoor and kisan by bringing socio-economic convergences like MGNREGA and RSBY, setting up of National social security fund (NSSF), and extension of swavalambhan initiative under new pension scheme (NPS) concomitant to Bharat Nirman and other infrastructure development initiatives.

The four pronged strategy for krishi aur kissan (agriculture&farmers) which has once again brought a special focus to increase in agricultural credit and interest subversion of 2 per cent a is continuity of past legacy of UPA . What is remarkably different this time is special focus on storage infrastructure and food processing, which could be a public policy response to sporadic food inflation cycles in the country. All this arrow towards the flavors of a welfare state.

On the other hand three major announcements in the budget which went off relatively twilight are financial sector legislative reforms, GoI’s intent to open food retail sector and shift towards nutrient based fertilizer policy for containment of subsidy in the long term. These announcements are in a way pointers to the colors of “reforms”.

Financial Inclusion:

• Anticipated area for the actors of financial inclusion from this budget was support to financial inclusion initiatives and new emerging models which the Finance Minister has not left completely untouched.
• Enhancements to the corpus of financial inclusion fund and financial inclusion technology fund along with Government’s intention to take banking facilities to all habitations with 2000 plus population by 2012 by use of appropriate technologies and business correspondent model is a welcome announcement.

Ye Dil Maange More:

“More is better than less”.

Being a voracious consumer of government policies and programs I wish more have been incorporated in the budget, at least the two specific points: One related to livelihoods and other to microfinance.
• Incentives for actors of livelihood promotion in demographically and socially challenging terrains and a special fund to provide impetus to it.

• Public support to branchless banking and microfinance channels in terms of complete duty free imports of hand held and other devices in the case of the former and public infrastructure sharing and financial support for the latter to take financial services to challenging geographies and thus spur local entrepreneurship in strife torn states like Jammu and Kashmir, NE states would have been a cheery at the top of sarkari cake.

I leave you here and welcome your comments on this piece.