[Gist of Kurushetra December 2020] Public Private Partnerships -Lending a Crucial Helping Hand

Mains Paper 3: Economy
Prelims level: Public private partnership
Mains level: Infrastructure

• Digitalisation could speed up India’s efforts to eradicate hunger and malnutrition through increased focus on better farming practices, adopting protein rich crops, boosting food processing industry, developing efficient cold chains etc. Digitalisation would eventually create an enabling environment that would face up to newer realities, issues and challenges.

• All this becomes more pertinent as climate change is making agriculture more risky and natural resources like land water becoming are becoming degraded. Now the game changer for making this critical difference could be in the form of private sector initiatives along with the government through the time tested public private partnership (PPP) model where the government can provide and co-financing the back-end of the value chain, while the private sector and farmer carrying out the rest.

• The government and regulatory bodies have rolled out several policy and financial initiatives aimed at inclusive rural growth with notable ones including the Aadhaar, a unique biometric identifier, Jan Dhan, the zero balance savings bank accounts that help direct transfer of social benefit payments, BHIM– the digital payment infrastructure BHIM. It is at this juncture that the government, regulatory bodies, financial service providers and fintech companies need to collaborate and set the ball rolling. Some basic steps that need to be taken in this direction include:

• To facilitate digitalisation of rural incomes this will encourage digital payments, improve efficiency, increase speed of payments, reduce cost of disbursement, enhance security, lower the incidence of associated crime, and increase transparency.

• Make it possible to convert digital income into cash. Given the scarcity of banking facilities, this will require building a network of trusted entities on the ground to enable assisted access to digital funds.

• These entities will have to be equipped to facilitate small amount transactions at higher frequency, saving account holders the trouble of travelling long distances to a physical bank branch. Given the preference of rural customers for human interactions, an assisted model will help them get increasingly comfortable with digital.

• To focus on issues related to safeguarding digital payments and digital identities putting in place consumer protection rules is critical to safeguarding people from fraud, especially rural women and low-income groups, who are most likely to be financially inexperienced.

• Targeted financial literacy and capability training can have a positive impact in such areas by increasing savings and promoting financial skills. Several corporates have been pushing the cause of financial literacy through their Corporate Social Responsibility programmes, thereby supplementing the efforts made by the government and regulators.

• Fintechs can put new technologies to work in order to shrink distances, expand customer segments, offer customised experiences, and bring in efficiency.

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