The math is simple. No matter what set of calculations you use, most of Indian labour is employed in what is called the ‘informal sector’ in the country, or in millions of small unregistered businesses.

This is rapidly changing (the number used to be around 90% but a 2018 report of the International Labour Organisation calculated it at around 81%) as doing business in the country formalises through a joint push of mobile phone-driven technology and strict tax measures. Thus, the not insignificant drop of about ten percentage points in informal labour.

But an overwhelming number of those employed still depend on informal employment for their livelihood.

As images of men—they are mostly men—returning to villages and towns in Uttar Pradesh and Bihar, two of India’s most populated but poorest regions, after the Covid-19 lockdown has shown, there would have to be a mass transfer of money in order for millions of Indians to sustain themselves through the Covid-19 lockdown that began for 21 days from midnight of March 24, 2020.

The government has announced a $22.5 billion initial economic package to help the poorest sections of the population. A significant portion of this money will be direct transfers of cash to farmers, landless agrarian labourers, underprivileged pensioners, widows, other underprivileged women, and the disabled. Around 80 million farmers alone are going to benefit from this.

The thing to note here is the methodology through which the Indian government is going to make this transfer. It would be using a digital-based system called the JAM trinity—Jan Dhan, Aadhar and mobile telephony. It is a system of digital identification and transfer of money which moved, in FY 2019-20, Rs. 253,259 crores (more than $40 billion), using more than 400 crore transactions, according to government data.

This architecture would now be the key for transfer of critical funds as millions leave employment in the middle of a historic lockdown to fight coronavirus. In a sense, this is moment of justification of this whole fintech system. In a country as vast as India, and with its challenges of physical infrastructure, enabling a fund transfer at a time when the very act of human interaction is fraught with danger could be a daunting task. Questions of manpower, delivery routes, and mechanisms could easily become impossible to overcome.

The digital mechanism architecture was built to plug massive leakages in government transfers, a task that it has performed remarkably well. Since inception in 2013-14, its cumulative gains have been Rs. 170, 377 crore.

It must be remembered that this architecture is used for verification purposes not only for cash transfer but also for transfers of government benefits in kind—for instance in getting gas cylinders, one of the popular schemes of the Narendra Modi government.

The coming of the coronavirus has provided the final evidence, if at all such evidence was anymore necessary, that India needed urgently. A 21st century financial inclusion architecture based on digital technology not only to keep up with the times but because such technology works at the very heart of its development challenge of overcoming physical infrastructure to deliver goods of governance.

This architecture will now be tested, with criticality, then perhaps ever before. It will be tested at a time when India is effectively running the world’s biggest ever quarantine with 1.3 billion people. It must cater to the needs of some of the poorest people in the world.

But in its very existence, it points to something vital and reassuring—the developmental use of technology in some of the most populated and vast parts of the world. At a time when technology is increasingly something that intrudes and distorts our very being, or fails to provide succour (as in the ongoing hunt for the right vaccine for Covid-19) in time, the deployment of fintech at the very forefront of India’s battle against coronavirus is a rare moment of tech glory.

Views are personal.

The author is a historian and a multiple award-winning author.

jam trinity

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