Revisiting Financial Inclusion with Human Development in India

Abstract

There have been several interventions by the government to promote financial inclusion in India. This article attempts to measure financial inclusion in India during 2001–2019, segregating states/union territories and using three dimensions: availability, access and usage of banking services. The index value of each dimension is calculated with the help of the method ‘Max–Min procedure to convert indicators into indices’, and overall index value of financial inclusion is obtained by taking the geometric mean of the three index values of the three dimensions. A fluctuating trend of financial inclusion reflects a less satisfactory performance. Financial inclusion is also evaluated following the CRISIL’s (Credit Rating Information Services of India Limited) criteria of measurement. The lack of a modernised financial system and financial illiteracy of the vulnerable groups, especially in remote areas, often holds back the mission to run efficiently. Finally, the nexus between financial inclusion, human development and the growth and development of India is studied with the expectation that people’s empowerment might help the mission to be successful. The states and regions that need attention are identified and required improvements in banking services are examined through an environmental analysis based on the existing system.