Examine the view that financial inclusion is an integral part of social and economic inclusion in a country like India. Also throw light on the usefulness of the R.B.I.'s Financial Inclusion Index.
Financial inclusion — access to affordable banking, credit, insurance and pensions — is foundational to social and economic inclusion in India, where inequality intersects with caste, gender and regional gaps.
Integral to inclusion because:
- Economic: Credit access enables MSMEs, farmers and self-employed workers to invest, smoothening consumption and reducing dependence on moneylenders.
- Social: Jan Dhan accounts empower women (over 55% of PMJDY holders); Direct Benefit Transfer plugs leakages in welfare delivery.
- Developmental: Enables formalisation, tax base expansion, and resilience against shocks (e.g., COVID relief transfers).
RBI's Financial Inclusion Index (FI-Index):
- Composite index (2021) measuring Access, Usage, Quality across banking, insurance, investments, pensions and postal sectors.
- Score rose from 43.4 (2017) to 64.2 (2024), signalling deepening inclusion.
- Usefulness: benchmarks progress, guides targeted intervention, informs policy on underserved regions, and enables inter-state comparison.
Yet gaps remain in digital literacy and last-mile delivery, requiring continued policy focus.
Answered By:
Sarvesh Jha
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