An Investigation into the Relationship Between Financial Inclusion and Economic Development of Indian States

The issue of inclusive growth is placed on the agenda of policy-makers across the globe. Though the governments of various countries have been considering financial inclusion as a weapon to combat poverty and to foster growth and development in the economy, there is an incongruency in the inclusion-growth nexus. This empirical study explores the relationship between these two variables in the Indian context. The researchers collect state-level data on parameters of economic development and financial inclusion over the period 2015 to 2020 to achieve the objective. The investigators compute a weighted composite index for economic development and financial inclusion of different states of India with the application of data reduction technique. The study finds a strong positive relationship between financial inclusion and economicdevelopment .