Prime Minister Narendra Modi will promise on Thursday to provide a bank account for every Indian household when he launches a major initiative that could save billions of dollars in welfare spending and help mend strained state finances.
India has grown to become Asia’s third largest economy, but nearly two-fifths of its 1.27 billion people do not have a bank account. This leaves them dependent on moneylenders and other informal financing routes. In a keynote speech this month, Modi made financial ‘inclusion’ a top priority of his administration.
He followed this up by writing 725,000 emails to bank officials urging them to support the initiative. “There is an urgency to this exercise as all other development activities are hindered by this single disability,” he said in a Twitter post. Modi won India’s biggest electoral mandate in 30 years in May with a promise to revive India’s flagging economy.
So far, he is yet to launch the big-bang reforms needed to break out of a cycle of low growth and high inflation. Some commentators say his emphasis on the new banking and insurance programme seeks to cement his support base among poor households with small savings. Over 40 percent of Indians live on less than one dollar a day.
The launch of the Jan Dhan Yojana, or the Scheme for People’s Wealth, comes weeks after Modi blocked a global trade deal, saying it threatened the interests of poor farmers.