This is a completely new concept that’s now coming down into use in the everyday analysis of the financial strategy to upscale the poor into sustainable prosperity cycle. A recent World Bank blog (April, 2019) clearly lays down the agenda for achievement on this score by steps.

To understand what is at stake here, we need to start with human capital development. It is accepted that focused efforts are needed to develop human capital at the grass root level. This implies that we need to work towards providing the deprived/poor section of the society with access to education and health care. Education creates skills that can be sold in the market and health provides the much needed sustainability for uninterrupted flow of earning. Once these two are made available cracking the vicious cycle of poverty becomes that much easier.

What would financial deepening do to help in this effort? This is where the aggregation of decades of actions to achieve effective alleviation of poverty comes into play. It’s now being proposed that there is a need to create a human development index across the globe. The index will provide us with a score of what a newly born would probably achieve 18 years down the calendar in terms of marketing his skill.

The entire score would depend on the opportunities that would be available to him in skilling himself and fighting off ailments. I have already discussed in my previous blogs the implications of health as an important component of fighting the curse of poverty. Here I would love to bring to you the current thoughts that are getting consolidated into policy reactions and the more and more responsibility that the financial sector is being called upon to play.

It’s being proposed now that the financial sector must deepen its effort in the global fight against poverty. As in the case of financial inclusion, wherein the sector has been tasked with creation of awareness and providing easy access to finance, here the financial sector is being tasked with providing resources for education and healthcare.

It’s now generally accepted that the governments across the globe have limited ability in fighting poverty. They can act as main agent in creation of a proper environment in which private actors play out an active role. For example, the private sector by earmarking a part of their earning (as in the case of CSR) for such efforts can contribute more than the government can.

But such effort requires intermediation of the financial sector. The financial sector by devising products, such as student loans or micro insurances can deepen the entire delivery into effective means. The role of the government would be to create intervention policy at the micro, meso and macro level. While we are familiar with the meaning of micro and macro level interventions, meso is a sociological terminology that is now finding wide use in policy sphere as well. It essentially implies patterns or interaction types specific to a group, community or organisation and their impact on various fields.

In short, what is being proposed here is that in alleviation of poverty we need to focus on creation of human capital and its development. The only way to do so is through financial deepening. In this process, financial actors are called upon to devise products and make them accessible to target groups by aggregating resources raised from various sectors of the economy.