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ABSTRACT
The present paper explores both the direct and indirect impact of ICT diffusion through the channel of digital finance on two development indicators such as poverty and income inequality at the sub-national level in India. Ordered probit estimation confirms that ICT diffusion directly reduces the persistence of poverty in both urban and rural areas. The application of ICT in the banking sector in the form of digital finance has a positive role in rural-urban poverty reduction. ICT has no direct impact on income inequality, though financial inclusion has a positive influence on both rural and urban inequality. ICT diffusion in the banking sector dampens the positive impact of financial inclusion on urban inequality with no impact on rural inequality. Proposed policy prescription can be strengthening of ICT infrastructure with wider and uniform spread of digital finance among rural and urban population so that more people can take advantage of it.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 12 time.
2 Andhra Pradesh, Assam, Bihar, Gujarat, Haryana, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Punjab, Rajasthan, Uttar Pradesh, Tamil Nadu and West Bengal.
3 This paper is concentrating on the time period after 2000 as the data on information and communication related variables and financial variables are not available before 2000.
4 In case of estimation of income inequality, social infrastructure stock index is also included as the availability of social infrastructure like education and health facility is expected to affect the income inequality also.
5 Based on author’s calculation through K-mean clustering.
6 Here only 2 years of data is available.
7 Measured by log(per capita NSDP at constant price).
8 These studies undertake state level analysis. They do not consider rural–urban bifurcation within individual states. This paper is unique in this way.
9 To avoid unnecessary lengthy representation, we are presenting only the marginal effects of individual components of ITI and their relevant interaction.
10 To avoid unnecessary lengthy representation, we are presenting only the marginal effects of individual components of ITI and their relevant interactions. For each component different version of Equation (4) is estimated considering different form of ICT.
Additional information
Notes on contributors
Simontini Das
Simontini Das: Presently she is attached with the Department of Economics, Jadavpur University. Before joining here, she was the faculty member of Department of Economics, Rabindra Bharati University. She has completed her Ph.D from Jadavapur University in 2012. Her areas of interest are developmental economics, ICT and development studies, gender studies, and applied econometrics. Her research has been published in International Journal of Social Economics, International Journal of Business Innovation and Research, Innovation and Development, Journal of Developing Areas, Journal of Economic Development, South Asian Economic Journal etc .and in many edited books. She has undertaken various project related to women empowerment ,export performance of the firm etc., funded by University Grant Commission.
Amrita Chatterjee
Dr. Amrita Chatterjee is an Assistant Professor at Madras School of Economics since 2016. She has got her Ph.D. from Jadavpur University, Kolkata. Her primary research interest is Development Economics with a special inclination towards Financial Inclusion and the Economics of Gender. She has both National and International Peer-reviewed journal publications.