Financial inclusion – making progress but still miles to go

Crisil, the rating agency has developed a financial inclusion index for India’s districts. The Index is called INCLUSIX. It is a ready reckoner on how the states and the districts have performed on financial inclusion. It measures achievements on basically three criteria.

  • BRANCH PENETRATION: This is measured through number of bank branches per lakh of population. Target is that there is a full service access point within 15 minutes walking distance of every household. Present status 89% in urban districts and only 3% in rural districts. (measured at district level)

  • CREDIT PENETRATION: This is measured on account of three factors,

– loan penetration : number of loan accounts / lakh of population;

– credit access: number of small borrowers loan accounts per lakh;

– number of agriculture advances per lakh of population

Credit to GDP ratio to reach to 10% by 2016 (present status is 94% of urban districts and 30% of rural districts) and 50% by 2020 (present status is 18% in urban district and only 2% in rural districts).

  • DEPOSIT PENETRATION: Number of saving account per lakh of population. While target is that by end 2015 every adult Indian has an electronic bank account, presently it is only 36% (urban: 45%; rural: 32%)

The INCLUSIX index shows 587 of the 638 districts of the country have improved their performance in 2012 as compared to 2011.


State-wise Kerala has the highest score of 80.4% and ranks at the top among the states. Other included in top five states are Delhi 78.8%, Goa (74%), AP and Tamilnadu (each scoring 64.8%).


Kerala has 13 districts among top 50. While all four southern states are among the top 10 states, but from northern India only Himachal Pradesh and Punjab are in the top 10. Even Gujarat is ranked only 15th. Among 20 districts having more than 30% Muslim population, 14 have fallen behind.


Right to Education is creating its own problems. As the Govt’s sustained campaign to enhance attendance in schools is bringing over 90% of children to schools, predictably it is also creating infrastructural problems. At primary level currently there are 5.23 lakh of vacancies. This would almost double, i.e. another 5.1 lakh vacancies, if the Govt decides to implement the RTE norm of 30 students per teacher.


Not only this the standard of teachers currently employed are not as per norms set out. Presently 7.74 lakh teachers do not have necessary qualification or training. In fact present criteria for qualification for primary teachers is having passed Teachers’ Eligibility Test. To be eligible to sit for this examination, one needs to have passed XIIth examination and undertaken a 2 year diploma in Teachers’ education, however most states are finding it extremely difficult to get teachers with such qualifications. In fact WB Govt appoints teachers with Xth pass (Refer earlier blog post on SRRF Dialogue ).


The problem is not limited to primary level, at secondary level, Rashtriya Madhyamik Shiksha Abhiyan requires 1.79 lakh new teachers for English, Mathematics and science. The problem is getting further accentuated since the institutes providing Teachers’ Training has capacities of less than 30,000 per annum.


The issue is not just limited to shortage of teachers, there are constraints of space, several states are allowing schools to add floors to present buildings of schools. Refer earlier post on SRRF Dialogue on this subject .


Let us all recognize that Govts (both at central level as well as at state levels), education authorities, school administrations are all facing huge challenges in complying with RTE, let all of us work together to ensure that future generations of India are not only literate but well educated.

Socio Research & Reform Foundation
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One Response to Financial inclusion – making progress but still miles to go

  1. Pran Nath Thussu says:

    In fact the concept is very encouraging. Even if the Banks open accounts with zero balance and the poorest of the poor and backward has an account it will be a loose loose situation for the banks initially, but in the longer run it will generat business for them and poor/villagers will start banking activies. If we look at the potential available in the rural areas sky is the limit but the present Govt. will have to push the poor oriented plans this will mean inclusive growth.

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