FINANCIAL INCLUSION IN INDIA: AN ANALYSIS USING A NEW AND COMPREHENSIVE FINANCIAL INCLUSION INDEX
Abstract
This paper examines the state of financial inclusion (FI) in India by constructing a comprehensive index that incorporates both commercial and cooperative banks and distinguishes between the rural and urban regions. The results show that economically better-off states such as Himachal Pradesh, Goa, and Karnataka have done well in FI, but the rural-urban financial inclusion gap shows an increase for several states. While the access has increased significantly after the Jan Dhan Yojana programme, usage does not show the much-needed improvement. Further, a panel data regression model is estimated to examine whether credit access has improved for the self-employed, who are in regular need of credit for their businesses. To do this, we have used the constructed indices as the dependent variable and have brought in explanatory variables on self-employment from NSSO sources. The estimation results show that for the self-employed household, credit access has not improved as much during the drive period as compared to pre-drive years.
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