Financial inclusion means extending the banking habit among the less privileged in both urban and rural India. RBI's guidelines, along with its promotion of `no-frills' savings bank account, are meant to serve the objective of greater financial inclusion. In a country, as vast as India, access to financial services like banking and insurance is denied to almost 60-80% of its population. But as Claessens, Professor of International Finance, University of Amsterdam, points out, access to financial services is no panacea though there are definite causal links between financial access, economic growth and poverty reduction.

Financial inclusion means extending the banking habit among the less privileged in both urban and rural India. RBI's guidelines, along with its promotion of `no-frills' savings bank account, are meant to serve the objective of greater financial inclusion. In a country, as vast as India, access to financial services like banking and insurance is denied to almost 60-80% of its population. But as Claessens, Professor of International Finance, University of Amsterdam, points out, access to financial services is no panacea though there are definite causal links between financial access, economic growth and poverty reduction.

There is perhaps a broader and more philosophic way of looking at financial inclusion and exclusion. Millions of people in India are without basic financial and social necessities and the size of the unemployed is itself an indication. The size of the regular workforce has shrunk from 8%-7% of the population between 1983 and 2003. There is negative growth of labor force in public sector employment and marginal growth of them in private sector. When we speak about going up of wages or even employment in metros we are closing our eyes to the "excluded" people. In the 1980s a 3% growth in the economy produced 1% increase in jobs. In 1990 it took 8% increase in GDP to produce the same employment as pointed out by Ifzal Ali, the Chief Economist of ADB. For decades now, as VK Kumaraswamy points out, governments have focused on growth leaving distribution to the mercies of the market place. There were huge investments in heavy industries, ports, steel plants, auto sector and the like which guzzled the acutely short capital. The reforms, after 1991, seem to have only accelerated this process and we are promoting "wealth concentrating growth" at the expense of "wealth diffusing growth".

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