The widely accepted view that finance is important to improve the lives of individuals has led to a tenacious policy support for financial inclusion. The term itself has evolved with time, and along with it, the approaches to measure financial inclusion. This paper in the 17th edition of the Inclusive Finance India Report describes the evolution of financial inclusion in India and the various strategies used to quantify so far. The paper presents new thinking on measuring financial inclusion, including the latest Findex measure from the World Bank and the holistic input-output-outcome approach by Dvara Research and XKDR Forum. While both approaches depend upon household surveys, the paper identifies gaps between the measurement focus of the Findex, which continues to focus on bank accounts and payment systems, and the Dvara-XKDR approach which incorporates a greater coverage of what the household holds as financial instruments, how they are used and the perceived well-being of households that are more financially included. The evidence presented suggests that the input-output-outcome can be more useful to both policy makers and financial service providers in identifying households that are financially less included.

Financial Inclusion Measurement: Deepening the Evidence, Indradeep Ghosh and Susan Thomas in Inclusive Finance India Report 2022, 17th edition, January 2023, Chapter 9, pages 117-125.