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Financial inclusion, Pradhan Mantri Jan Dhan Yojna Scheme and economic growth: Evidence from Indian States

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  • Bhanu Pratap Singh
  • Annu Kumari
  • Tanya Sharma
  • Abhishek Malhotra

Abstract

The study examines the impact of financial inclusion, promoted through the Pradhan Mantri Jan Dhan Yojna (PMJDY) scheme, on the economic performance across the Indian states. Using the index of financial inclusion developed in Sarma (2008), the current study develops a three‐dimensional financial inclusion index for 25 major Indian states from 2011 to 2016 to assess the status of financial inclusion across Indian states. The impact of financial inclusion promoted through the PMJDY scheme on the economic performance of the Indian states is investigated using bootstrap corrected fixed effects estimation and inference in the dynamic panel. The study's finding suggests that most Indian states fall under the low or medium level of financial inclusion. The dynamic panel results reveal a positive and significant association between financial inclusion and economic growth across Indian states. Further, results show PMJDY scheme marginally improved the pace of economic growth but failed to improve the overall economic prosperity level across states. Poor usage of financial services and a rise in the number of dormant accounts after the PMJDY scheme's launch are the significant limitations of the PMJDY scheme's failure.

Suggested Citation

  • Bhanu Pratap Singh & Annu Kumari & Tanya Sharma & Abhishek Malhotra, 2021. "Financial inclusion, Pradhan Mantri Jan Dhan Yojna Scheme and economic growth: Evidence from Indian States," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 50(3), November.
    • Handle: RePEc:bla:ecnote:v:50:y:2021:i:3:n:e12186
    DOI: 10.1111/ecno.12186
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    Cited by:

    1. Rajesh Barik & Sanjaya Kumar Lenka & Jajati K. Parida, 2022. "Financial Inclusion and Human Development in Indian States: Evidence from the Post-Liberalisation Periods," Indian Journal of Human Development, , vol. 16(3), pages 513-527, December.
    2. Garg, Aashish & Goel, Pooja & Sharma, Anuj & Rana, Nripendra P., 2022. "As you sow, so shall you reap: Assessing drivers of socially responsible investment attitude and intention," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    3. Batabyal, Amitrajeet & Higano, Yoshiro & Nijkamp, Peter, 2024. "Introduction to Spatial Spillovers: Viewpoints from Asia," MPRA Paper 120901, University Library of Munich, Germany, revised 08 May 2024.
    4. Nidhi Agarwala & Sudarshan Maity & Tarak Nath Sahu, 2024. "Efficiency of Indian banks in fostering financial inclusion: an emerging economy perspective," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 341-353, June.
    5. Emon Kalyan Chowdhury & Rupam Chowdhury, 2024. "Role of Financial Inclusion in Human Development: Evidence from Bangladesh, India and Pakistan," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(1), pages 3329-3354, March.
    6. Shubham Chavriya & Gagan Deep Sharma & Mandeep Mahendru, 2024. "Financial inclusion as a tool for sustainable macroeconomic growth: An integrative analysis," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 95(2), pages 527-551, June.
    7. Bhanu Pratap Singh & Anup Kumar Yadava, 2022. "Technical efficiency of financial inclusion and human development: Insights from the Indian states," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 51(2), July.

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