Financial Inclusion

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International Journal of Business Management & Research (IJBMR) ISSN: 2249-6920 Vol. 3, Issue 1, Mar 2013, 147-156 © TJPRC Pvt. Ltd.

FINANCIAL INCLUSION FOR INCLUSIVE GROWTH OF INDIA - A STUDY OF INDIAN STATES RADHIKA DIXIT1 & MUNMUN GHOSH2
1

Associate Professor, Indira School of Business Studies, Pune, India Assistant Professor, Indira School of Business Studies, Pune, India

2

ABSTRACT
India is one of the largest and fastest growing economies of the world, but what has been the most disturbing fact about its growth is that its growth has not only been uneven but also discrete. It has been uneven in the sense that there has been no uniformity in its growth performance and it has been discrete and disconnected with regard to growth and distribution of growth benefits to certain sectors of economy. And thus the need for inclusive growth comes in the picture of Indian economic development. However for attaining the objectives of inclusive growth there is a need for resources, and for resource generation and mobilization financial inclusion is required. It plays a very crucial role in the process of economic growth. The present paper focuses on to understanding inclusive growth phenomenon its need and financial inclusion as an instrument to attain it with reference to its extent in Indian States. The research has been done using secondary data source. Analysis of natural hierarchical grouping cluster is done considering parameters like GDP per capita, literacy rate, unemployment rate and index of financial inclusion (Johnson R.A. & Wichern D.W., 2000) on few of Indian states.

KEYWORDS: Inclusive Growth & Financial Inclusion INTRODUCTION India is one of the largest and fastest growing economies of the world, but what has been the most disturbing fact about its growth is that its growth has not only been uneven but also discrete. It has been uneven in the sense that there has been no uniformity in its growth performance and it has been discrete and disconnected with regard to growth and distribution of growth benefits to certain sectors of economy. The Indian economy, though achieved a high growth momentum during 2003-04 to 2007-08, could not bring down unemployment and poverty to tolerable levels. Further, a vast majority of the population remained outside the ambit of basic health and education facilities during this high growth phase. In recent decades, economic and social inequalities have increased alongside high growth rates which have increased regional inequalities. Over 25% of Indians continue to live in abject poverty. As a result, Inclusive growth has become a national policy objective of the Union Government. And thus the need for inclusive growth comes in the picture of Indian economic development. In context of Indian growth planning it is a relatively new terminology which got the attention of policy makers in the Eleventh Five Year Plan. Inclusive growth as the literal meaning of the two words refers to both the pace and the pattern of the economic growth, it basically means, broad based, shared, and pro-poor growth. As per the Planning Commission of India “The term “inclusive” should be seen as a process of including the excluded as agents whose participation is essential in the very design of the development process and not simply as welfare targets of development programmes.” In a simpler and wider sense it means that inclusive growth as a strategy of economic development should not only aim at equitable distribution of

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growth benefits but also at creating economic opportunities along with equal access to them for all. In the present paper an effort has been made to understand the inclusive growth phenomenon its need and financial inclusion as an instrument to attain it with reference to its extent in Indian States.

LITERATURE REVIEW
Levine (1997) empirically tested the neo-classical view and finds that countries with larger banks and more active...
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