The role of financial inclusion in promoting sustainable economic development in India

Abstract

Promoting financial inclusion has been widely recognized as a key component of development agenda in India, facilitating the delivery of affordable and formal financial services to ensure equitable development and support poverty reduction and inclusive economic growth. This paper discusses financial inclusion as a tool for achieving sustainable development using a systematic review of literature and analyzing secondary data sources like Reserve Bank of India (RBI), Pradhan Mantri Jan Dhan Yojana (PMJDY) and National Payments Corporation of India (NPCI). It assesses the impact of several initiatives including PMJDY, Jan-Dhan-Aadhaar-Mobile (JAM) Trinity, Unified Payments Interface (UPI) and financial programmers based on Self-Help Groups (SHGs). The results indicate considerable improvement and the RBI Financial Inclusion Index (FI-Index) has improved from 43.4 during FY2017 to 67.0 during FY2025, while the number of accounts opened under PMJDY has gone up from 55.29 crore in August 2018 to 56.16 crore by August 2025, and transactions on the UPI grew from 5.35 crore during FY2018-19 to 185.87 crore during FY2024-25. The study findings indicate that digital financial infrastructure, Direct Benefit Transfer (DBT) and financial service interventions targeting women have enhanced financial service access and utilization beyond the level of account-holding financial services. But there are still issues like regional differences, lack of financial education and inactive accounts. The study has found that financial inclusion is a significant enabler for Sustainable Development Goals (SDGs) and therefore, the policy support, digital innovation, financial literacy and consumer protection should be continued to support inclusive and sustainable economic empowerment in India.