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Policy Implications for Financial Inclusion of Unskilled Labor Migrants: Insights from Goa

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Current Issues in the Economy and Finance of India (ICEF 2018 2018)

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Abstract

With increasing urbanization, India has been witnessing phenomenal domestic migration and the resultant surge in remittances . The paper examines the case of using migrant remittances as one of the key triggers to encourage financial inclusion . It also seeks to initiate a policy debate on the role that the State should be playing towards financial inclusion . The paper echoes the need for a business approach tailored to financial needs and behavior of the end user. In line with this, it attempts to assess the demand side challenges faced by the banking sector in promoting financial services to the poor labor migrants . It also tries to assess their willingness and ability to shift to mobile based platforms of financial inclusion . The paper presents its findings based on a primary survey conducted in the state of Goa which has been witnessing a considerable inflow of labor migrants annually.

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Notes

  1. 1.

    PMJDY, LPG-Subsidies

  2. 2.

    http://www.business-standard.com/article/news-ians/goa-eyes-rs-25-000-crore-industrial-investment-goa-newsletter-113052400753_1.html.

  3. 3.

    http://articles.timesofindia.indiatimes.com/2012-09-03/goa/33562112_1_manohar-parrikar-chinchinim-villagers-migrants.

  4. 4.

    (1–0.59)/0.59 = 69%

  5. 5.

    This could be a social concern especially if this practice is creating hindrances in tackling crime in the state.

  6. 6.

    Unstructured Supplementary Service Data (USSD) is a protocol used by GSM cellular telephones to communicate with the service provider’s computers. It is the USSD protocol that is used to check mobile account balances (example, *123*1#).

  7. 7.

    Availing products and services multiple times in smaller-valued transactions as and when required.

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Acknowledgements

This work was supported by the ICSSR, New Delhi under Grant 02-34/2011-RP. The grant was received to conduct research on Tourism in Goa and its Impact on Socio-Economic Conditions and Sustainable Development in the State. At the time of research, crime in the state of Goa due to labor migrants had become a major concern- especially for an economy driven by tourism. The authors felt the need to investigate the systemic reasons for this socio-economic development. Based on the premise that a financially included migrant having a stake in the development of host economy is less likely to be anti-social, the authors narrowed down their focus on studying the financial behavior of labor migrants. In the wake of recent developments in financial inclusion in India, the research eventually came to focus on the policy implications of the financial behavior of migrants

Author information

Authors and Affiliations

  1. Department of Economics, BITS Pilani, K K Birla Goa Campus, Goa, 403726, India

    Mridula Goel

  2. BITS Pilani, K K Birla Goa Campus, Goa, 403726, India

    Saurabh Nayak

Authors
  1. Mridula Goel
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  2. Saurabh Nayak
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Corresponding author

Correspondence to Mridula Goel .

Editor information

Editors and Affiliations

  1. Department of Economics, Birla Institute of Technology and Science (BITS), Pilani, Goa, India

    Aswini Kumar Mishra

  2. Trulaske College of Business, School of Accountancy, University of Missouri, Columbia, MO, USA

    Vairam Arunachalam

  3. Department of Economics, Birla Institute of Technology and Science (BITS), Pilani, Goa, India

    Debasis Patnaik

Appendix: Survey Codes

Appendix: Survey Codes

Parameters influencing the variables comprising the ‘Access’ component

Min value

Max value

A. Remittance instrument

0—Other

3—Banks

B. Cost of remittance [commission + opportunity cost]

1—100 INR

3—>300 INR

C. Days taken by the remitted amount to reach

0—Same day

3—>3 days

D. Formal access to financial services [bank account]

0—No

1—Yes

E. Savings instrument

0—Other

3—Banks

F. Access to formal source of credit

0—No

1—Yes

G. Formal access to financial services [Life insurance]

0—No

1—Yes

H. Formal access to financial services [Health insurance]

0—No

1—Yes

  1. Note All variables were normalized before calculation of the access component

Parameters influencing the variables comprising the ‘Usage’ component

Min value

Max value

I. Daily wage rate [in hundreds]†

1—

5—

J. Monthly savings [in thousands]

0—<1 k INR

10—>10 k INR

K. Yearly frequency of remittance

1—1

10—>10

L. Average amount remitted [in thousands]

0—<1 k INR

10—>10 k INR

  1. Note All variables were calculated on an annual basis and were then normalized before the final calculation of the usage component

Parameters influencing the variables comprising the remittance demand

Min value

Max value

A. Migrant has a formal access to financial services

0—No

1—Yes

B. Migrant’s family has a formal access to financial services

0—No

1—Yes

C. Monthly savings [in thousands]

0—<1 k

10—>9 k

D. Average amount remitted [in thousands]

0—<1 k

10—>9 k

E. Yearly frequency of remittance

0—0

10—>9

Parameters influencing the variables that decide the favorability of mobile based financial inclusion

Min value

Max value

A. Cost of remittance [commission + opportunity cost]

1—100–200 INR

3—>300 INR

B. Days taken by the remitted amount to reach

0—real-time

3—>2 days

C. Mobile usage [mobile phone?]

0—No

1—Yes

D. Mobile usage [family owns mobile phone?]

0—No

1—Yes

E. Formal access to financial services [bank account]

0—No

1—Yes

F. Formal access to financial services [family’s bank account]

0—No

1—Yes

G. Monthly frequency of mobile recharge

0—rarely

4—weekly

H. Literacy [Newspaper]

0—No

1—Yes

I. Mobile usage [check balance?]

0—No

1—Yes

J. Mobile usage [use SMS?]

0—No

1—Yes

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Goel, M., Nayak, S. (2018). Policy Implications for Financial Inclusion of Unskilled Labor Migrants: Insights from Goa. In: Mishra, A., Arunachalam, V., Patnaik, D. (eds) Current Issues in the Economy and Finance of India. ICEF 2018 2018. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-99555-7_14

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