Digital Technology Improving Financial Inclusion in India: Post Covid Evidence

Abstract

Technology is transforming the financial inclusion landscape and growing the digital infrastructure that is essential to accomplishing numerous national objectives. The Covid-19 pandemic and the subsequent lockdowns imposed in 2020–21 significantly impacted economies worldwide due to restricted mobility and disrupted goods and services, while also exposing the vulnerabilities of traditional financial systems. Amidst this challenging scenario, technology played a crucial role in bridging gaps and enhancing financial access. There has been a pivotal role of digital technology in improving financial inclusion prospects, especially during the COVID-19 outbreak, when access to digital transactions and financial services became a necessity to prevent economic collapse. Governments around the world responded by offering financial support to citizens, creating both opportunities and difficulties for promoting financial inclusion. Due to its ability to enhance the lives of those with low incomes, financial inclusion is still a subject of extensive investigation. Subsequent analyses highlight the mutually beneficial connections between digital technology, financial inclusion, and economic expansion. This research has been carried out in the Indian context using only secondary sources of data, to provide a comprehensive, evidence-based analysis of the role of digital technology in improving financial inclusion with particular reference to the Pre- and Post-Covid eras.  A variety of published reports and articles, including newspaper stories, journal articles, and policy papers, have been utilized to conduct the semi-systematic evaluation. Drawing from secondary sources of data through documentary analysis, this study uncovers compelling evidence of how digital technology has expanded financial inclusion in India and the Covid-19 pandemic has acted as the prime catalyst of this process. The evidence presented herein also contributes to the growing body of research on financial inclusion's impact on low-income livelihoods and serves as a catalyst for future studies on leveraging technology for economic growth and improved financial well-being. The study's overall conclusions indicate that there is a strong correlation between the acceleration of financial inclusion in India and the Covid-19 measures for the quick, simple, and widespread accessibility of digital technology. The post-COVID increase in the RBI's Digital Payments Index (RBI-DPI) underscores India's astonishing leap in digital payment usage, which has been fuelled mostly by the success of UPI. The use of Aadhaar and digital payment options, as well as increased competition, has increased financial inclusion, all made possible through contributions from the implementation of the JAM trinity (Jan Dhan, Aadhaar, and Mobile).