Measuring Financial Index of India: A Multidimensional Approach

Abstract

Economic growth is facilitated by  participation of all the sections of society ensuring  higher level of financial inclusion. It is necessary to  provide some index to measure this important factor  in both developed as well as developing economies.  It requires to study various dimensions that can be  used to indicate financial inclusion through various  parameters. The present study contributes towards the  field by developing a robust and comprehensive measure  for measuring the financial inclusion in a country. The  Financial Inclusion Index (FII) is computed using the  three elementary dimensions -Availability, Accessibility  and Usage of banking services by all sections of the  society. These dimensions are assigned fixed weights  to create a robust index for analysis of financial  inclusion. The index value is categorised into varying  ranges– Low, Medium and High, indicating the degree  of financial inclusion from 1996 to 2022. The study  finds the rise in the financial inclusion level of India  in later half of the study period mainly due to radical  upliftment in financial policcy transformations for underprivileged sections of the society.