Impact of Financial Inclusion on Household Income in Rural India with special reference to the state of Uttar Pradesh

The study examines the impact of financial inclusion on household income levels in rural areas across Indian states using panel data from the NABARD All India Rural Financial Inclusion Survey (NAFIS) for 2016-17 and 2021-22. The study employs a fixed effects panel regression model with clustered standard errors to analyse the differential impact of financial inclusion between Uttar Pradesh and other states. Our study highlights that penetration of institutional savings, an important component and driver of financial inclusion, has a positive and significant impact on the average monthly income of rural household at all India level. This indicates that formal savings foster economic empowerment amongst rural households. However, in the case of state of Uttar Pradesh, the effect is weaker compared to the overall impact.