The Policy of Financial Inclusion in India: The Paradox of Inclusive Governance

Garima Sharma

Abstract


The idea of inclusive development has acquired a new dimension in recent times, with rising emphasis of the state policy on resolving socio-economic exclusion through the mechanism of the market, as evidenced by the rise of the ‘semi-formal sector’ and NGO/private sector-led microfinance initiatives in countries like Brazil, Bangladesh and India. In India, this has produced a consolidated discourse of the policy of Financial Inclusion. The main aim of this paper is to study the wider social and political contradictions implicit in the idea of Financial Inclusion in the specificity of the Indian context.
Given the manner in which the initiatives to achieve socio-economic inclusion through the formal financial system are being undertaken, the policy of inclusive finance has become an instrument for the accommodation of socially-inclusive development within the neo-liberal paradigm of individual enterprise, thereby subverting the very rationale of development.

While inclusive development through the formal financial system was a core area of the state policy since the 1950s and was subsumed under the wider imperative of social inclusion, the current policy reveals itself to be more inclined towards accommodative inclusion under a neoliberal financial system, with the consensus that the merits of the ‘strategy’ of Financial Inclusion lie in that it will hike the profitability of banks if they are able to tap the potential ‘market’ of the rural poor. This has led to a proliferation of the norm of developmental self-reliance based on entrepreneurship rather than the realization of well-being as an important developmental outcome. 


Keywords


Development ; Financial inclusion ; Neo;liberalism ; Well;being ; Individual entrepreneurship

References


Ananth S, Sabri Oncu T (2013) Challenges to Financial Inclusion in India: The Case of Andhra Pradesh. Economic & Political Weekly, Vol. XLVIII, (7): 77-83

Basu P (2005) A Financial System for India's Poor. Economic & Political Weekly, Vol. XL (37): 4008-4012

Bhunia A (2014) Financial Inclusion needs another model. Opinion article, The Hindu Businessline

Chavan P (2005) How 'Inclusive' are Banks under Financial Liberalization? Economic & Political Weekly 4647-4649

Committee on Comprehensive Financial Services for Small Businesses and Low Income Households (2014) Government Report, Reserve Bank of India

Dev S Mahendra (2006) Financial Inclusion: Issues and Challenges. Economic & Political Weekly 4310-4313

Foundation, EPW Research (2007) Will Basel II Norms Slow Financial Inclusion? Economic & Political Weekly 904-910

Hudon M (2009) Should Access to Credit be a Right? Journal of Business Ethics 17-28.

Ramachandran VK, Swaminathan M (2005) Financial Liberalization and Rural Credit in India. New Delhi: Tulika Books

(2008) Report of the Committee on Financial Inclusion. January. Accessed October 6, 2014. http://sksindia.com/downloads/Report_Committee_Financial_Inclusion.pdf.

(2014) Reserve Bank of India Annual Report 2013-14. Government Report, Reserve Bank of India

Schwittay AF (2011) The financial inclusion assemblage: Subjects, technics, rationalities. Critique of Anthropology 31(4): 381-401

Shetty SL, Bipin K Deokar (2014) Financial Inclusion: Differences between the Government and RBI? Economic & Political Weekly 12-15




DOI: http://dx.doi.org/10.14666/2194-7759-5-1-003

Refbacks

  • There are currently no refbacks.


"Journal Global Policy and Governance" ISSN online 2194-7740 / ISSN print 2194-7759

All publishing rigths reserved to © Transition Academia Press. Executive editor: Prof. Dr. Giorgio Dominese