Linking Financial Inclusion and Human Development in India with Special Reference to Maharashtra

Financial inclusion refers to a process that ensures the ease of access, availability and usage of the formal financial system for all members of an economy. Financial inclusion broadens the resource base of the financial system by developing a culture of savings among large segment of rural population and plays its own role in the process of economic development. The process of financial inclusion also reinforces the process of human development. The paper presents the conceptual framework on the association between inclusive finance and human development. Empirical evidences on the association between IFI and HDI of India in general, and Maharashtra in particular, are presented in this paper. The convergence of the districts of Maharashtra in financial inclusion is computed to identify whether there is a reduction in disparity in the financial inclusion of the 35 districts of Maharashtra. There is found to be a significant positive correlation between these two development variables in India and in the districts of Maharashtra. It is also empirically proved that the districts with lower financial inclusion are converging towards the districts with higher financial inclusion in Maharashtra.