RBI@90: Time to accelerate pace of work to achieve last mile development

The Reserve Bank of India (RBI), which was conceptualised in accordance with the guidelines presented by Dr BR Ambedkar to the Hilton Young Commission, also known as Royal Commission on Indian Currency and Finance, based on his book titled ‘The Problem of the Rupee – Its Origin and Its Solution,’ completed 90 years of its existence on April 1, 2024.

Addressing the inaugural session, Prime Minister Narendra Modi said “I consider those who are associated with RBI at this time to be very fortunate. The policies you formulate today and the work you do will determine the direction of RBI for the next decade right into its centenary year. And this decade is equally crucial for the ‘Sankalp Yatra’ of a Viksit Bharat.”

The Prime Minister also flagged the issue of gross non-performing assets (NPAs) of banks, which was around 11 per cent in 2018, and decreased to less than three per cent by September 2023, and how the Central government infused nearly Rs. 3.5 lakh crore of capital and implemented several governance-related reforms including new framework of the Insolvency and Bankruptcy Code, which alone resolved close to Rs. 3.25 lakh crore worth of loans. He also revealed that today banks’ credit growth has reached up to 15 per cent. Talking about the financial inclusion, he referred to 52 crore Jan Dhan accounts in the country. He also referred to the Unified Payments Interface (UPI) that has now become a globally recognized platform. It processes more than 1200 crore transactions every month. Exuding confidence that the RBI can take Bharat’s success to the global level, he stressed the need to work together to further enhance India’s economic self-reliance over the next ten years.

No doubt, the RBI is playing a pivotal role in our economic development by regulating the country’s monetary policy, managing foreign exchange reserves, and supervising the banking sector. It regulates the flow of credit to various sectors and acts as a custodian of the country’s foreign exchange reserves, managing them to stabilize the currency and support international trade. Its supervision of banks and financial institutions ensures stability and integrity of the financial system, fostering investor confidence and facilitating capital formation. Its multifaceted functions certainly have an indispensable role in shaping the nation’s economic landscape and fostering sustainable development.

A major challenge in India becoming a Viksit Bharat is the low level of gross enrolment ratio (GER) in higher education of students from SC, ST and OBC communities, who account for the country’s major chunk of population. The Union Ministry of Education had said a day ahead of this year’s Republic Day that the total enrolment in higher education has increased to nearly 4.33 crore in 2021-22 from 4.14 crore in 2020-21. The enrolment of SC students was pegged at 66.23 lakh in 2021-22 as compared to 46.07 lakh in 2014-15, while that of ST students at 27.1 lakh as compared to 16.41 lakh in 2014-15.

According to the ministry’s statement, enrolment of OBC students has increased to 1.63 crore in 2021-22 from 1.13 crore in 2014-15. The minority student enrolment was put at 30.1 lakh in 2021-22 from 21.8 lakh in 2014-15. The GER has been pegged at 28.4 as against 23.7 in 2014-15.

What can the RBI do to increase India’s GER in higher education with a special emphasis on the students from deprived sections of society? A lot can be done provided the central bank takes some corrective measures along with banks in the private and public sector. There is a very poor penetration of education loans among SC, ST, OBC and minority students. Most of them do not know how much collateral-free loan they can get from the banks to finance their higher studies. There is little or perhaps no effort being made to popularize education loans among the needy. Out of way efforts are not made by the bans to finance the higher education of needy students. I don’t know if Class XI and XII students’ data is with our banks so that they can offer various loan options. By giving a boost to the ongoing collective efforts to bring more and more students from the deprived sections to seats of higher education, the RBI will do rendering yeoman service to the cause of building an inclusive thriving society, paving the way for Viksit Bharat by 2047.

‘India Employment Report 2024: Youth Employment, Education and Skills,’ a report brought out by the International Labour Organization (ILO) and the Institute for Human Development (IHD), says: “India remains poised to reap a demographic dividend. A large proportion of the population is of working age, and India is expected to be in the potential demographic dividend zone for at least another decade. But the country is at an inflexion point because the youth population, at 27 per cent of the total population in 2021, is expected to decline to 23 per cent by 2036. Each year, around 7–8 million youths are added to the labour force whose productive utilization could lead to India reaping a demographic dividend.”

The report further says: “The education participation of youths and youths who are out of the labour force drive the low youth labour force participation rate. Youth participation in the labour market has been much lower than among adults and was on a long-term (2000–19) declining trend, primarily due to greater participation in education.” Let us honestly recognize the importance of higher education in a country like India and the repercussions of its denial to vast masses on one pretext or the other. Such deprivation perpetuates cycles of poverty and inequality, hindering social mobility and economic progress.

Without access to higher education, the youth are often limited to low-skilled, poorly paid employment, exacerbating disparities in income and opportunities. Investing in higher education for all youth is not only a matter of equity but also a strategic imperative for India’s future prosperity and well-being.