IGF 2019 WS #233 Strategy for financial inclusion of informal economy workers

Organizer 1: Kaustubh Sharma, Jindal Global Law School

Speaker 1: Arnab Bose, Civil Society, Asia-Pacific Group
Speaker 2: Seema Sharma, Private Sector, Asia-Pacific Group
Speaker 3: Kaustubh Sharma, Civil Society, Asia-Pacific Group

Policy Question(s): 

How to achieve financial inclusion of Informal economy workers through Digital Inclusion?
? What does this paradigm looks like?
How will technology such as Artificial Intelligence (AI) and Digital Ledger Technology play a role in this?
How will sustainable development goals be accounted for in this process?

Relevance to Theme: With an overwhelming part of workers in India remaining ‘informal’, contractual, unorganized or simply not having any channel to be formal; a strategy to formalization/inclusion is pivotal to address the most basic of developmental issues. To note the root causes of informality becomes important to create strategies. Technology becomes important to scale and accelerate an intended transition towards financial inclusion. This paper has brought out one strategy financial inclusion of the static workers in the informal economy. It draws out a blueprint for a socio-technical transition involving Distributed Ledger Technology. Now the stage is set to start the niche stage of a socio-technical transition.

Relevance to Internet Governance: Our proposal talks about the problems the informal sector faces in India and how to solve those problems by devising a scheme for their financial inclusion. To achieve this goal, we intend to discuss the role of internet governance.

The research being cited (attached) for this workshop narrates that there is a particular problem till recently which created a disconnect between global/national policy to local realities in India. While some of these disconnects have been addressed, many persist and may pose as a dangerous risk towards sustainable development of emerging economies including India. Additions to the research has pointed out that while the internet could have reduced the disconnect several interviews with local stakeholders in India and Germany has pointed that the internet, its present architecture, platforms, business models, and governance of the internet are increasing the disconnect. This workshop will also deliberate on the method used for creating the narrative and data collection which is the Gender, Age and Disabilities (GAD) lens of inclusion.

While the access to mobile and data is widespread, the usage for financial services is limited. Internet Governance and cutting edge technology may be a great enabler in the process of formalizing smart contracts between workers of the informal economy and their clients. Process maps using technologies such as Distributed Ledger Technology (DLT) and Artificial Intelligence (AI) will then be drawn out to generate scalable contracts which will ensure trust and traceability without disrupting the existing mechanism. The current social media applications of the internet are more standardized to familiarization and entertainment aspects leading to a big void in terms of local utility and professional services.

The internet tool devised by us,SeenAb, would not only collect the data from the user for this purpose but would also bridge the data inconsistencies among the users.

The footprint of Internent governance on financial inclusion is well acknowledged in various parts of the world. Fintech, or financial technologies, are becoming the norm in various ways, with positive results. There is strong correlations between mobile ownership and usage and reduction in household poverty alongside significantly higher per capita consumption expenditures as well. The financial internet technology provides entrepreneurial opportunities for business operators in the informal economy, and is fundamental for facilitating local-local and global-local financial flows.

Internet Governance’s role has to be multidimensional in nature, enabling transactions between various stakeholders in both monetary and non-monetary ways. Legally tenable and enforceable contracts that are based on non-monetary relationships may provide the necessary confidence to the banks to start looking at these as ‘monetizable’. Such contracts may be used by the financial institutions to take a next step towards providing credit to the informal sector workforce.

The same smart service contract may be the first step towards recognizing the ‘formality’ of the Indian informal sector. The static nature of business may need to redefine the formality paradigm and may also help design policies which not only provide the credit but also insurance service. The current budget, envisages providing minimum insurance coverage to the informal sector. The quasi-formal work contracts and its recognition in the formal domains may further alleviate the risks of higher policy provisions and leakages in such forward looking policy provisions.

Role of internet governance in providing formal financial services to informal sector is crucial. Internet Technologies can be be leveraged to address both the gaps identified above, firstly, the information asymmetry about the policy and second the formalization of contracts. Due to the diffused nature of the engagements at the community levels, it is necessary that the particular concerns and peculiarities get addressed suitably. Most suitable internet technology platforms, which are not only robust but also easily accessible, need to be identified to undertake the cumbersome exercises with significant transaction costs attached to them. Further, a lot of these contracts also have to be allowed by emerging technologies in real time to ensure the objectives of reducing both time and costs stated earlier in a secure, trustworthy manner. In such a scenario, platforms based on blockchain technology emerges as a viable option to ameliorate these challenges.


Birds of a Feather - Classroom - 30 Min

Description: The worrkshop will be designed in a classroom style discussion with the speakers posing and discussing each and every problem areas related to our topic starting with the devising a strategy involving socio-technical transition to transform the lives of the static workers in informal ecnomies. Speakers will talk about how financial inclusion through digital inclusion and explaign the need for an Internet governance paradigm. We will talk about how we will be using cutting edge technologies of AI and DLT to achieve our goals and the interplay of different sharholders.
The speakers will broadly focus on adressing these issues-
1. Who is the static workforce?

2. How is the static workforce (special focus on laundry person - dhobi) engage with the community?
a) What are the financial / nonfinancial transactions beyond direct service?
b) How does the workforce access the basic services like power?
c) Is there a semi-formal arrangement which can be formalized?

3. What are the challenges for the static workforce to avail the formal financial schemes and services? Why there is a need for Internet governance to counter this challenge.

4. How can the community / financial institutions work towards providing the financial services to this workforce?
a)What are the challenges that the community might face while making this provision?

5. Can a technology system be designed to overcome the challenge of formality?
a)Will such a facility be accepted as a formal engagement which can be used by the workforce for its various needs?

6. How can such a system improve governance and reduce transaction costs for government schemes and services?
Followed by conclusion that answers our policy questions (How to achieve financial inclusion of Informal economy workers through Digital Inclusion?
? What does this paradigm looks like?
How will technology such as Artificial Intelligence (AI) and Digital Ledger Technology play a role in this?
How will sustainable development goals be accounted for in this process?)

Expected Outcomes: This workshop will evaluate if the proposed strategy is suitable to achieve digital inclusion. Will deliberate on the usage of the Gender, Age and Disability lens to evaluate Internet Governance and the need for digital inclusion. This worksop would look into the role of AI/DLT/emerging technologies and its evolution in terms of Data inclusion. The format of the workshop compels participants to create a narrative of there own, and also to understand the paradigms of Internet Governance and corresponding notions of inclusion. The narrative becomes more compelling with the usage of the Gender Age and Disability lens, and the concepts of Local Governance. In other words this workshop seeks to create a narrative by which participants can start looking at the internet as a platform for intervention to improve the quality of life, and in this scheme of things data is a key ingredient. Participants attending the workshop both on line and on site will be able to appreciate the role of data, internet, AI/DLT, Local Governance, Inclusion, interconnected-ness, human centricity and sustainable development in one platform.

Onsite Moderator: 

Kaustubh Sharma, Civil Society, Asia-Pacific Group

Online Moderator: 

Kaustubh Sharma, Civil Society, Asia-Pacific Group


Kaustubh Sharma, Civil Society, Asia-Pacific Group

Discussion Facilitation: 

Preferably onsite participation.

Online Participation: 

Usage of IGF Tool


GOAL 1: No Poverty
GOAL 2: Zero Hunger
GOAL 3: Good Health and Well-Being
GOAL 5: Gender Equality
GOAL 8: Decent Work and Economic Growth
GOAL 9: Industry, Innovation and Infrastructure
GOAL 10: Reduced Inequalities
GOAL 17: Partnerships for the Goals