Financial Inclusion Index through MGNREGS in Virudhunagar District

Abstract

Financial inclusion is the delivery of financial services through receipt of transfer payments, savings, loans, insurance, short term credit and remittance at affordable costs to sections of disadvantaged and low income segments of society. It is argued that availability of banking and payments services to the entire population without discrimination is the prime objective of public policy. Therefore, having a savings account is the only a starting point of financial inclusion. MGNREGA, the flagship programme of the UPA government, was revolutionary in its promise of inclusive growth and financial inclusion, the right to work and the dignity of labour and a rational, participatory relationship with the State. While the importance of financial inclusion is widely recognized, the literature lacks a comprehensive measure that can be used to measure the extent of financial inclusion across economies. This paper attempts to find out Financial Inclusion Index(FII) through MGNREGS. The FII is a multi-dimensional index that captures information on various dimensions of financial inclusion in one single digit lying between 0 and 1, where 0 denotes complete financial exclusion and 1 indicates complete financial inclusion.