Financial Inclusion as a Tool of Democratic Governance: an Analysis of Jan Dhan, Upi, and Digital Commerce
Year: 2026
Type: article
Abstract: The idea of democratic governance has traditionally been limited to democratic participation, electoral integrity and accountability of institutions. But within the emerging world viewpoints, realization of democratic agency tightly and exclusively intertwined with economic empowerment and the equitable distribution of wealth. Extreme constraints on the ability of members of a population to enjoy their civic voice occur when a large share of them are systematically excluded from financial inclusion by the formal financial system. This paper aims to explore the contribution of financial inclusion as an enabler to good governance, which is a prerequisite for achieving good governance, focusing on the pace and scale of India’s financial inclusion that is fast accelerating through the implementation of Digital Public Infrastructure (DPI). This study examines how technological interventions facilitated by the state actively engage in the process of democratizing access to finance through a comprehensive three-dimensional analysis of three key enablers – the Pradhan Mantri Jan Dhan Yojana (PMJDY), the Unified Payments Interface (UPI) and the emerging technological framework of Digital Commerce. It discusses the role of these platforms to formalise the burgeoning and informal economy and to reduce existing socio-economic inequalities that are systemic. The study is qualitative with secondary data and is based on two theoretical models: Amartya Sen's Capability Approach and Institutional Theory where the hypothesis is that digital financial inclusion necessarily makes a vulnerable subject of the state into an empowered and resilient economic citizen. While the former ups the state capacity, India's DPI promise much more by breaking down barriers to banking, removing rent seeking intermediaries via precision Direct Benefit Transfers (DBT), preventing platform monopolies due to decentralized market access and giving the marginalized groups a verifiable economic identity. You can virtually see that it is in essence rewriting the democratic social contract from a patron/subscriber system of distributing welfare payments to a transparent, rights-based one, where economic equality is considered a fundamental, democratic right.
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W7204770064