Abstract:
This paper analyzes income related inequality in financial inclusion in India using a
representative household level survey data, linked to State-level factors. It shows that (a) the
extent of financial exclusion is quite severe among households across all income groups, (b)
income related inequality in financial inclusion varies widely across sub-national regions in
India, but it is quite high in most of the cases, (c) income related inequality in financial
inclusion cannot be considered as synonymous to income inequality. A notable result is that
greater availability of banking services fosters financial inclusion, particularly among the
poor. This paper also provides estimates of the effects of various socio, economic and
demographic characteristics of households on propensity of a household to use formal
financial services, and compare that for rural and urban sectors.
