Financial Inclusion: A Statewise Assessment in India

Financial inclusion is a contemporary issue that has featured in the reforms agenda of several countries. Although it has gained momentum over time, the access to finance and basic financial services remained highly skewed across demographic and geographic segments. The purpose of the study is to analyse the performance of states/union territories in each dimension and composite index of financial inclusion. The focus is on ranking Indian states and union territories, identifying the major changes in ranks during 2000-01 to 2016-17, and finding the rate of expansion. The index of financial inclusion is calculated using three dimensions as per Sarma methodology. Log linear regression model is used to determine the growth rate in the measure of inclusion. The findings show that the index of financial inclusion value has enhanced in 28 and declined in four states/union territories out a group of 32 states/union territories. While a robust positive growth is observed in 23 states/union territories, the deterioration turns out to be significant in Chandigarh only.