Bank account for everyone. What?
Modi is on news for one thing or the other. The latest one is what the media has dubbed as a step towards “financial inclusion”.
By some report, he has enabled the opening of 15 million bank accounts. He is proposing each household to have at least 2 accounts and incentivizing people handsomely (line of credit, interest rates, debit cards, overdraft) to take up on the offer.
Why is this news? He is not giving free rice or TV like some other politicians. After all, he is not putting money in the accounts. Why would he insist that people have bank accounts?
I suspect after all, this is really an effort to narrow the shadow economy, reduce black money, increase the so-called “organized labor” sector and increase tax revenues for the state and for the central government. For exactly that reason, I will be very surprised if state governments put any speed breaker for this initiative.
In the first few weeks of his taking the PM position, he tried to clamp down on the “unaccounted” money stored in Swiss banks by several Indian nationals. There seems to be a pattern and he seems to be seriously focused on reducing financial leakage.
I suspect this move, if successful, will be the first of the steps taken to increase % of people who pay income-taxes, reduce cash transactions, reduce black money/ shadow economy, increase revenues to the exchequer. If all these initiatives are successful, it will help boost the output of the company, without doing much about unemployment or education or public health or any real reform. This is not to say reforms wont happen, but will help add to the GDP.