Financial Inclusion and Development: Issues and Concerns

Abstract

In India, growth with equity has been the central objective right from the inception of the planning process. Accordingly, over the years, initiatives have been taken continuously to address the issue of inclusive growth. The Eleventh Five Year Plan (2007-12) and Twelfth Five Year Plan (2012-17) re-emphasized the need for a more inclusive growth in order to ensure that the per capita income growth is more broad-based. India has followed a multi-pronged strategy to promote financial inclusion. The global experience also suggests that countries that allow diversity in approaches are more likely to achieve better results. Diversity in approaches not only serves better the diverse demand for financial services, but also reduces systemic risks, increases competition, and improves efficiency. The farming micro, small and medium enterprises have immense potential to play a critical role in achieving the objective of faster and more inclusive growth as these sectors contribute to output and employment generation in a significant way with capacity to expand regionally diversified production and generating widely dispersed off-farm employment.