Impacts of ICT and digital finance on poverty and income inequality: a sub-national study from India

ABSTRACTABSTRACTThe 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.KEYWORDS: ICTdigital financepoverty incidenceincome inequalityrural–urban disparityJEL CLASSIFICATION: O33G2I32O18R12 Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationNotes on contributorsSimontini DasSimontini 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 ChatterjeeDr. 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.