The idea of inclusive finance in India has largely focused on access. Millions of people have been brought into the formal financial system through bank accounts, digital payments, credit schemes, and direct benefit transfers. Yet, according to the Chief Economic Adviser, access alone is not enough. What is missing is graduation, the ability of beneficiaries to move from dependence on support systems to sustainable economic self reliance.
The Chief Economic Adviser of the Government of India recently highlighted that many financial inclusion efforts risk becoming static if they do not help people progress economically over time. Opening a bank account or offering subsidised credit is only the first step. The real challenge lies in ensuring that households and small entrepreneurs can steadily increase incomes, build assets, and eventually rely less on state support.
Graduation, in this context, refers to a structured pathway that helps low income individuals move up the economic ladder. This includes access to skills training, market linkages, stable employment opportunities, and financial products that evolve with their growing capacity. Without this progression, inclusion can turn into long term dependence, where beneficiaries remain trapped at the same income level despite being formally connected to the financial system.
The concern is particularly relevant for microfinance and welfare linked credit programmes. While such initiatives have expanded credit access significantly, many borrowers struggle to scale their activities or absorb economic shocks. When income growth does not keep pace with borrowing, financial stress can increase rather than decrease. Graduation focused models aim to solve this by combining finance with livelihood support, mentoring, and social safety nets during the transition phase.
The CEA’s remarks also reflect a broader shift in policy thinking. As India’s economy grows and digital infrastructure deepens, the focus is moving from quantity to quality. Policymakers are increasingly asking whether schemes are helping people become more productive, resilient, and independent, rather than simply counting how many accounts or loans have been issued.
0 Comments