Financial Inclusion and Health: India's Progress and Challenges in Informal Sector Welfare
Contents4
The Hindu - Opinion · 15 Jul 2026 · 2 min read
Prelims · Economy Mains · GS3 Economy High relevance
India has significantly improved financial inclusion, with adult account ownership rising from 56% to 89% in a decade, but now faces the challenge of transitioning from mere access to comprehensive financial health for informal workers.
Key points
National Pension System (NPS) has enabled informal sector workers like Nar to save for retirement, showcasing the shift from basic banking to long-term financial planning.
Financial Health encompasses managing day-to-day expenses, resilience against shocks, and future investments, crucial for both individual dignity and national economic resilience.
World Bank’s Global Findex reports India's adult account ownership surged to 89%, creating a foundation for advanced financial health initiatives.
Viksit Bharat 2047 aligns with financial health goals, aiming to transition from welfare to wealth creation, supported by PM Modi's vision.
[GS3-Economy] Financial health products like responsible credit and insurance, offered by firms like SalarySe, reduce stress and enhance stability for informal workers.
Jan Dhan 2.0 proposes integrating PMJDY with DBTs, APY, and other schemes to transform accounts into resilience platforms, benefiting women and gig workers.
Digital Public Infrastructure (e.g., ULI, DigiLocker) can scale financial health by enhancing household capability and agency through AI and innovation.
Public-Private Collaboration, as seen in the Netherlands and Indonesia, can amplify financial health impacts through joint efforts by regulators and market players.
Way Forward: India should integrate PMJDY with all social protection schemes, leverage digital infrastructure for real-time financial health data, and foster public-private partnerships to scale innovative solutions.
Key terms
- Pradhan Mantri Jan-Dhan Yojana (PMJDY)
- A financial inclusion program launched in 2014 to provide universal access to banking, credit, insurance, and pensions. Its relevance for UPSC lies in its role in direct benefit transfers and women's empowerment (56% accounts held by women).
- Digital Public Infrastructure
- India's stack of interoperable digital systems (e.g., UPI, Aadhaar) enabling scalable service delivery. For UPSC, it is pivotal for GS3 (technology) and GS2 (governance) due to its role in financial inclusion and efficiency.
- National Pension System (NPS)
- A voluntary, defined-contribution pension system in India, regulated by PFRDA, aimed at providing retirement income to all citizens, especially the unorganized sector. It matters for UPSC as it reflects India's social security architecture and financial inclusion policies.
- Financial Health
- A state where individuals can manage expenses, absorb financial shocks, and invest in future goals. For UPSC, it is critical for GS3 (economy) and GS2 (governance) as it ties to inclusive growth and welfare schemes.
Practice question
Discuss the role of digital public infrastructure and financial inclusion schemes in enhancing financial health for India's informal sector workers. (250 words, 15 marks)
GS3 15 marks 250 words Mains
Key terms to include: Digital Public Infrastructure National Pension System (NPS) Financial Health Pradhan Mantri Jan-Dhan Yojana (PMJDY) Viksit Bharat 2047 Public-Private Collaboration Informal Sector Jan Dhan 2.0
Answer framework
Introduction
Briefly introduce the concept of financial health and its importance for informal sector workers. Mention India's progress in financial inclusion (e.g., PMJDY, NPS) and the shift towards comprehensive financial health.
Role of Digital Public Infrastructure
Explain how UPI, Aadhaar, and DigiLocker enable scalable financial services.
Highlight the potential of AI and real-time data in improving financial decision-making for informal workers.
Impact of Financial Inclusion Schemes
Discuss PMJDY's success in providing universal banking access and its evolution into Jan Dhan 2.0.
Analyze the National Pension System (NPS) and its role in long-term financial planning for informal workers.
Public-Private Collaboration
Cite examples from the Netherlands and Indonesia where partnerships enhanced financial health.
Emphasize the need for regulators and market players to co-create solutions like responsible credit and insurance products.
Challenges and Way Forward
Identify gaps in transitioning from access to usage (e.g., low financial literacy, product awareness).
Suggest integrating PMJDY with all social protection schemes and leveraging digital infrastructure for real-time monitoring.
Conclusion
Stress the need for a holistic approach combining digital innovation, policy integration, and stakeholder collaboration to achieve Viksit Bharat 2047's financial health goals.
Fact check
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