Unveiling the factors influencing financial inclusion in India: a comprehensive analysis

Figures & data

Table 1. Level of financial inclusion.

Financial Inclusion Index (Value)	Financial Inclusion Grade
0 to 0.3	Low Financial Inclusion
0.3 to 0.5	Medium Financial Inclusion
0.5 to 1	High Financial Inclusion

Source: Author’s own calculation based on RBI Data.

Table 2. Composite index of financial inclusion and ranking of all major Indian states.

State	2005	Rank	State	2020	Rank
High Financial Inclusion (0.5–1)
Goa	0.92	1	Goa	0.85	1
Kerala	0.67	2	Tamil Nadu	0.73	2
Tamil Nadu	0.64	3	Kerala	0.72	3
			Maharashtra	0.60	4
			Telangana	0.52	5
Medium Financial Inclusion (0.3–0.5)
Karnataka	0.48	4	Karnataka	0.46	6
Andhra Pradesh	0.42	5	Punjab	0.42	7
Punjab	0.42	6	Haryana	0.41	8
Maharashtra	0.36	7	Tripura	0.36	9
Himachal Pradesh	0.34	8
Low Financial Inclusion (<0.3)
Uttaranchal	0.29	9	West Bengal	0.29	10
Haryana	0.27	10	Andhra Pradesh	0.29	11
Tripura	0.23	11	Gujarat	0.27	12
West Bengal	0.22	12	Sikkim	0.27	13
Gujarat	0.21	13	Himachal Pradesh	0.27	14
Orissa	0.20	14	Orissa	0.26	15
Sikkim	0.20	15	Uttaranchal	0.25	16
Uttar Pradesh	0.17	16	Assam	0.21	17
Rajasthan	0.14	17	Rajasthan	0.20	18
Jharkhand	0.13	18	Madhya Pradesh	0.19	19
Madhya Pradesh	0.13	19	Chhattisgarh	0.14	20
Meghalaya	0.12	20	Uttar Pradesh	0.13	21
Mizoram	0.10	21	Jharkhand	0.13	22
Bihar	0.09	22	Bihar	0.12	23
Assam	0.09	23	Mizoram	0.11	24
Arunachal Pradesh	0.07	24	Manipur	0.06	25
Chhattisgarh	0.07	25	Nagaland	0.05	26
Nagaland	0.01	26	Meghalaya	0.03	27
Manipur	0.01	27	Arunachal Pradesh	0.01	28

Source: Author’s own calculation based on RBI Data.

Figure 1. FII state wise in the year 2005 and 2020.

Source: Author’s own calculation using STATA.

Figure 2. FII distribution (2005 and 2020) map.

Source: Author’s own calculation using STATA.

Table 3. Econometric test results.

	NSDPit, Factit, Road lengthit URPoP shareit, NVAit, LITit (Independent Variables) Group (Unit) Effect
FIIit (DepVariable)	Stat.	Prob
Modified Wald test for heteroscedasticity	22.61	0.0000
Wooldridge test for autocorrelation	63.042	0.0000
Pesaran test for contemporaneous correlation	38.349	0.0000

Source: Author’s own calculation.

Table 4. Determinants of financial inclusion.

VARIABLES	FII
Per capita NSDP	0.127***	(0.0292)
Net Value added	−1.4408***	(4.3609)
Number of factories	7.3506***	(2.1506)
Road length	2.4907**	(9.9508)
Urban Population Share	0.0533*	(0.0307)
Literacy Rate	0.148	(0.122)
Constant	−2.080***	(0.370)
Observations	378
R-squared	0.742
Wald statistics (chi^2)	141.43
Number of Years	15

Source Author’s own calculation.

Notes: On top of the columns are the dependent variables. The first column shows the name of the independent variables. The estimated coefficients are the marginal effects and numbers in parentheses indicate the standard errors; ***; **; and *denote the significance level at 1%, 5% and 10% levels.

Data availability statement

Authors agree to provide data file and the materials supporting the results and analyses upon reasonable request.