Use of financial services – evidence from Indian households

Sandhya M.Das, U. S. Mishra


The aggregate indicators of financial inclusion in India have significantly improved over time, particularly since 2005-06 with the institution of explicit policies for financial inclusion. Evidence from the Global Findex database, however, shows a less impressive growth in real use of financial services by households. The present study sought to examine the use of financial services by Indian households with the help of data from the India Human Development Survey, 2011-12 (IHDS-II), using non-conventional concepts of multiple deprivations, specificity of use combinations, interdependence and multi-dimensional first order dominance. Considerable inter-state and intra-state inequality was observed in the use of formal financial services, as indicated by the high ratio of fully-deprived households to fully-privileged households in most states and its wide range. The multi-dimensional index of use of financial services (Di) too displayed wide difference in the level of achievement, with Himachal Pradesh, Kerala, Punjab and Karnataka ranking high and Meghalaya, Nagaland, Mizoram, Bihar and Assam at the bottom reaffirming their capabilities in development. Unexpectedly, Gujarat, Tamil Nadu and Maharashtra had below-average indices, pointing to intra-state inequalities. North Eastern (except Sikkim), Eastern (Bihar, Jharkhand, West Bengal) and Central (Madhya Pradesh, Uttar Pradesh) regions fared poor with low index.



financial services, usage, financial inclusion, deprivations

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