Inclusive growth with financial inclusion: A study of self help groups in Rajasthan

The Indian economy is growing at a steady rate of 8.5% to 9% in the last five years or so. Most of the growth is from industry and services sector. The potential for growth in the primary and SME sector is enormous. Limited access to affordable financial services by the vast majority of the population in the rural areas and is believed to be acting as a constraint to the growth impetus in these sectors. Access to affordable financial services enlarges livelihood opportunities and empowers the poor to take charge of their lives. Such empowerment aids social and political stability. Apart from these benefits, FI imparts formal identity, provides access to the payments system and to savings safety net like deposit insurance. Hence FI is considered to be critical for achieving inclusive growth; which itself is required for ensuring overall sustainable overall growth in the country. But to achieve this, the government should provide a less perspective environment in which banks are free to pursue the innovations necessary to reach low income consumers and still make a profit. Financial service providers should learn more about the consumers and new business models to reach them.