Financial Inclusion is
the process of ensuring the access of financial services to the weaker sections
and low-income groups at an affordable cost. It is the universal access to a
wide range of financial services at a reasonable cost. It refers both the place
and pattern of growth, which are very much interlinked. It focuses on productive
employment rather than on direct income redistribution. It should be
broad-based across sectors and it should also be inclusive of large part of the
country’s labors force. According to this concept inclusiveness refers to
equality of opportunity in terms of access to markets, resources and unbiased
regulatory environment for business and individuals.
Recently
India has taken several steps towards financial inclusion for achieving faster
inclusive growth. This study seeks to examine the achievement of the Indian
states regarding the financial inclusion. Applying the methodology of Rotated
Principal Component Analysis this study has computed a comprehensive measure of
financial inclusion for each state. For this analysis ten indicators of
financial Inclusion have been considered. This study has used the data
published by the Reserve Bank of India (RBI) and the Government of India. Ranks
of the states in accordance with the Composite score show that although the
state of Goa is the best, most of the states in southern region have performed
better in terms of financial inclusion. However, the levels of financial
inclusion of the states in India have a low mean and high disparity. This study
has revealed a strong positive association between the human development and
the financial inclusion of the states in India.The paper concludes that it is
more challenging for any developing country like India to achieve inclusive
growth than getting 7 to 10 percent growth in GDP.
