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Does PMJDY Scheme Augmented Financial Inclusion in India? Evidence from Indian States

Author

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  • Singh, Bhanu Pratap
  • Kumari, Annu
  • Sharma, Tanya
  • Malhotra, Abhishek

Abstract

The study attempts to examine the impact of financial inclusion, promoted through Pradhaan Mantri Jan Dhan Yojna (PMJDY) scheme, on the economic performance across the Indian states. Using the index of financial inclusion developed in Sarma (2008), the current study develops a 3-dimensional FII for 25 major Indian states for the year 2011 and 2016 to assess the status of financial inclusion. Cross-sectional and pooled Ordinary Least Square regression techniques are applied to examine the impact of financial inclusion on the economic performance of the Indian states. The slope and interaction dummies are used to incorporate the effect of PMJDY scheme, which takes value 1 for structural change and 0 for the control period. The major findings of the study suggest the PMJDY scheme failed to augment financial inclusion in India in the short-run. Lack of physical infrastructure, human development and effective governance are the major reasons behind the failure of the PMJDY scheme. Hence, structural reforms are warranted in the regulatory framework for better economic outcomes.

Suggested Citation

  • Singh, Bhanu Pratap & Kumari, Annu & Sharma, Tanya & Malhotra, Abhishek, 2020. "Does PMJDY Scheme Augmented Financial Inclusion in India? Evidence from Indian States," MPRA Paper 104442, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:104442
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    References listed on IDEAS

    as
    1. Tarlok Singh, 2008. "Financial development and economic growth nexus: a time-series evidence from India," Applied Economics, Taylor & Francis Journals, vol. 40(12), pages 1615-1627.
    2. Oyewo Babajide Michael & Oyewole Oyedayo Sharon, 2014. "Financial System, Financial Inclusion and Economic development in Nigeria," International Journal of Management Sciences, Research Academy of Social Sciences, vol. 2(3), pages 139-148.
    3. Mandira Sarma, 2008. "Index of Financial Inclusion," Working Papers id:1575, eSocialSciences.
    4. Mandira Sarma, "undated". "Index of Financial Inclusion," Indian Council for Research on International Economic Relations, New Delhi Working Papers 215, Indian Council for Research on International Economic Relations, New Delhi, India.
    5. Loan Thi-Hong Van & Anh The Vo & Nhan Thien Nguyen & Duc Hong Vo, 2021. "Financial Inclusion and Economic GROWTH: An International Evidence," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 57(1), pages 239-263, January.
    6. Noelia Cámara & David Tuesta, 2018. "Measuring financial inclusion: a multidimensional index," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The role of data in supporting financial inclusion policy, volume 47, Bank for International Settlements.
    7. Dipasha Sharma, 2016. "Nexus between financial inclusion and economic growth," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 8(1), pages 13-36, April.
    8. World Bank, 2019. "Finance for Growth," World Bank Publications - Reports 33563, The World Bank Group.
    9. Sanjaya Kumar Lenka & Ruchi Sharma, 2017. "Does Financial Inclusion Spur Economic Growth in India?," Journal of Developing Areas, Tennessee State University, College of Business, vol. 51(3), pages 215-228, July-Sept.
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    11. Youxing Huang & Yan Zhang, 2020. "Financial Inclusion and Urban–Rural Income Inequality: Long-Run and Short-Run Relationships," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 56(2), pages 457-471, January.
    12. Dinabandhu Sethi & Debashis Acharya, 2018. "Financial inclusion and economic growth linkage: some cross country evidence," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 10(3), pages 369-385, June.
    13. Recep YORULMAZ, 2013. "Construction of a Regional Financial Inclusion Index in Turkey," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 7(1), pages 79-101.
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    Cited by:

    1. Bhanu Pratap Singh & Anup Kumar Yadava, 2022. "Technical efficiency of financial inclusion and human development: Insights from the Indian states," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(2), July.

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    More about this item

    Keywords

    Financial inclusion; Economic growth; PMJDY scheme; Pooled OLS regression;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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