devoted to the service, and to change how it is managed. a number of worthwhile efforts are underway to improve the quality of public education and healthcare. but if resources leak or public servants are not motivated, which is likely in the worst governed states, these interventions are not very effective. this idea was inspired from those in richard hofstadter ’ s seminal book the age of reform on the difficulties of reform in the united states around the early twentieth century. bis central bankers ’ speeches some have argued that making a public service a right can change delivery. it is hard to imagine that simply legislating rights and creating a public expectation of delivery will, in fact, ensure delivery. after all, is there not an expectation that a ration card holder will get decent grain from the fair price shop, yet all too frequently grain is not available or is of poor quality. information decentralization can help. knowing how many medicines the local public dispensary received, or how much money the local school is getting for mid - day meals, can help the public monitor delivery and alert higher - ups when the benefits are not delivered. but the public delivery system is usually most apathetic where the public is poorly educated, of low social status, and disorganized, so monitoring by the poor is also unlikely to be effective. some argue that this is why the middle class should enjoy public benefits along with the poor, so that the former can protest against poor delivery, which will ensure high quality for all. but making benefits universal is costly, and may still lead to indifferent delivery for the poor. the middle class may live in different areas from the poor. indeed, even when located in the same area, the poor may not even patronize facilities frequented by the middle class because they feel out of place. and even when all patronize the same facility, providers may be able to discriminate between the voluble middle class and the uncomplaining poor. so if more resources or better management are inadequate answers, what might work? the answer may partly lie in reducing the public ’ s dependence on government - provided jobs or public services. a good private sector job, for example, may give a household the money to get private healthcare, education, and supplies, and reduce their need for public services. income could increase an individual ’ s status and increase the respect they are accorded by the teacher, the policeman or the bureaucrat. but how does a

cash. the danger of attaching conditionality is that if the monitor is corrupt or inefficient, the whole process of direct benefits transfers can be vitiated. nevertheless, it will be useful to monitor usage carefully where automation is possible, and automatically attach further benefits to responsible usage. a related concern is whether cash transfers will become addictive – whether they become millstones keeping the poor in poverty rather than stepping stones out of it. this is an important concern. cash transfers work best when they build capabilities through education and healthcare, thus expanding opportunity, rather than when they are used solely for inessential consumption. the vast majority amongst the poor will seize opportunities, especially for their children, with both hands. nevertheless, if there is evidence that cash transfers are being misspent – and we should let data rather than pre - conceived notions drive policy – some portion could be given in the form of electronic coupons that can be spent by the specified recipient only on food, education or healthcare. 2 another set of concerns has to do with whether private providers will bother to provide services in remote areas. clearly, if people in remote areas have the cash to buy, private providers will find their way there. indeed, a particularly desirable outcome will be if some of the poor find work providing services that hitherto used to be provided by public servants. moreover, implementing cash transfers does not mean dismantling the system of public delivery wherever it is effective – it only means that the poor will pay when they use the public service. the broader takeaway is that financial inclusion and direct benefits transfer can be a way of liberating the poor from dependency on indifferently delivered public services, and thus indirectly from the venal but effective politician. it is not a cure - all but will help the poor out of poverty and towards true political independence. but financial inclusion can do more ; by liberating the poor and the marginalized from the clutches of the moneylender, by providing credit and advice to the entrepreneurial amongst the poor, and by giving household the ability to save and insure against accidents, it can set them on the road to economic independence, thus strengthening the political freedom that good public services will bring. this is why financial inclusion is so important. five ps of financial inclusion let me end with a vision of how the rbi can speed up and enhance financial inclusion of the kind i have just outlined. financial inclusion in my view is about getting five things right : product