Significance of Financial inclusion for India

Source: The post Significance of financial inclusion for India has been created, based on the article “A BANK ACCOUNT OF HER OWN.” published in “Indian express” on 19th March 2024.

UPSC Syllabus Topic: GS Paper 3 – Indian Economy- Inclusive growth and issues arising from it.

News: The article discusses how increasing financial inclusion, especially among women, is crucial for development in India.

What is financial inclusion?

Financial inclusion is the delivery of financial services at affordable costs to all sections of society (including the disadvantaged and low-income segments).

The term ‘Financial’ includes all types of financial services, including savings, payments and credit from all types of formal financial institutions.

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What factors influence financial inclusion?

Education’s Role: Educated women are more likely to be aware of and use micro-credit schemes.

Impact of Digital Skills: Women with digital skills are more inclined to engage in digital financial transactions.

Occupation Matters: Working women, irrespective of their job type, often know about and use loan programs.

Media Access: Access to electronic media influences financial literacy and service usage.

Age Factor: Younger women tend to adopt digital modes of payment more readily.

Household Influence: The gender of the household head and their assets affect access to micro-credit programs.

Why is financial inclusion important for India?

Supports Sustainable Development: Financial inclusion is linked to 8 of the 17 UN Sustainable Development Goals, essential for India’s overall progress.

Reduces Gender Disparities: The NFHS data underscores the reduction in the gender gap in financial sectors, resonating with findings from the Global Gender Gap Report and highlighting the significance of inclusive finance in gender equality.

Boosts Women’s Economic Empowerment: By increasing women’s access to financial services, it enhances their economic independence and opportunities.

Facilitates Widespread Account Ownership: The increase in bank account ownership, with a significant 42% rise in India, demonstrates its expanding reach.

Improves Social and Economic Growth: Broad financial inclusion contributes to the overall socio-economic development of the country.

What are the government initiatives for financial inclusion in India?

Pradhan Mantri Jan Dhan Yojana: This initiative greatly contributed to opening over 28 crore bank accounts for women, enhancing their financial access.

Deendayal Antyodaya Yojana: National Rural Livelihood Mission (DAY-NRLM): Focuses on improving rural women’s livelihoods and financial stability.

Skill India Mission: Provides skill training, helping women gain employment and financial independence.

Mission Shakti: Aims at empowering women through various socio-economic measures.

Pradhan Mantri Awas Yojana: Offers housing-related financial assistance, improving women’s living conditions and economic stability.

Pradhan Mantri Matru Vandana Yojana: A maternity benefit program that supports women financially during pregnancy and childbirth.

Way forward

To further advance financial inclusion in India, focusing on women in non-women-headed households is crucial. Integrating financial education within skill development programs and raising awareness about digital transaction safety, especially among the youth, are key steps. Regular updates to these programs will ensure they remain relevant and effective.

Question for practice:

Discuss how increasing financial inclusion, particularly among women, contributes to India’s sustainable development and gender equality.