Sustainable economic development in India : the dynamics between financial inclusion, ICT development, and economic growth

Abstract

The roles played by the financial sector and of information and communication technology (ICT) in economic growth are well established in the literature. With increasing development and the convergence between the financial and ICT platforms, digital financial systems emerged which have opened new opportunities to close the wealth gaps between the “haves” and “have-nots” in the developing world. In this paper, we examine the short-run and long-run dynamics between economic growth, financial inclusion initiatives, and ICT infrastructure development in 20 Indian states over the period from 1991 to 2018. Using the Granger-causality technique, we show evidence of strong temporal causality between these variables in the short and long term. Our empirical results demonstrate that careful co-curation of ICT infrastructure development, financial inclusion initiatives, and economic growth strategies is essential for these Indian states to achieve sustainable economic development.