Financial Inclusion Among Indian States: An Analysis Through Financial Inclusion Index

The purpose of this study is to know the level of financial inclusion (FI) among Indian states for the two-decade period. With the help of the two-stage principal component analysis (PCA) method, we constructed a composite financial inclusion index (FII) to measure the level of FI. We have collected data from secondary sources such as the Reserve Bank of India (RBI) and Economic and Political Weekly Research Foundation reports for 2000–2020. The study has built an overall FII, which is considered a comprehensive measure of FI using the dimensions—Availability, Penetration and Usage. The results show that Goa, Kerala and Tamil Nadu states topped with high FI, while Mizoram, Nagaland, Manipur and Meghalaya states ranked with low FI in the entire study period. To achieve complete FI, the RBI, government, National Bank for Agriculture and Rural Development and the other implementing agencies will have to work together so that FI can be achieved in a short period.