Micro-econometrics Approach to Financial Inclusion through PMJDY in India: A Case of Cuttack District of Odisha

Abstract

The paper aims at measuring the extent of financial inclusion through Pradhanmantri Jan Dhan Yojana (PMJDY) by analysing the primary data, collected during May-August, 2016 from 300 households of Cuttack district of Odisha, India. The data are analysed with the help cross tabs, ratio, percentage and Logit model. Accessing of financial services by the poor and vulnerable groups is a pre-condition for to employment, poverty reduction, economic growth and social cohesion. Recently, the Prime Minister of India has taken the initiative which has given birth to PMJDY as the National Mission on Financial Inclusion on August 28, 2014. Its main objective is to guarantee financial inclusion of the poor and rural population and to give them financial freedom and stability. It has the motto to cover all households in the country having a bank account and other banking facilities. The scheme is based on “Sab ka sath sab ka vikas” i.e. inclusive growth. It was reported that a total of 7 crores bank accounts have been opened with deposits totalling more than 5000 crores of rupees as of November 6, 2014. The findings of the study show that the effectiveness of PMJDY depends on the various factors like economic factors, socio-demographic factors and others. It shows that the factors like income from primary occupation, level of education, age, gender, bank deposit, post office deposit, mutual fund, loans to friends and relatives, self-help groups, other policies like LIC, working family members outside village for wage and in MGNREGA influence more than half of the people to open their accounts under PMJDY. Whereas some other factors like unawareness of the scheme, more distance from the banks discourage some people to open their account under this scheme. The result of the Logit model reveals as years of education, income from secondary occupation, working in MGNREGA and outside village for wage increases the odds ratio to have an account under PMJDY for the households’ increases by 9, 6, 97 and 99 percent respectively. This calls for the policy to increase the level of education, and other earning opportunity to the households so that the ultimate objective of the Yojna could be achieved.