A Detailed Study On Financial Inclusion of the Gond Tribes in Coimbatore District, Tamil Nadu

• Post by: Arjun Kumar
• October 9, 2023
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K. Nupur Temani[1], Senthil Kumar M.[2], Balamurugan S.[3], Brathikan V. M.[4]

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[1] Student, Department of Economics, Kumuraguru College of Liberal Arts and Science, Coimbatore
Email: nupurtemani.k@gmail.com

[2] Department of Economics, Kumuraguru College of Liberal Arts and Science, Coimbatore

[3] PHD Scholar, Madras Institute of Developmental Studies, Chennai

[4] Lead Innovation, Research Cell, Assistant Professor, Kumaraguru College of Technology, Coimbatore

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Title:	A Detailed Study On Financial Inclusion of the Gond Tribes in Coimbatore District, Tamil Nadu
Author(s):	K. Nupur Temani, Senthil Kumar M., Balamurugan S., Brathikan V. M.
Keywords:	Financial Inclusion; Scheduled Tribes; Financial Awareness; Household Income
Issue Date:	October 9, 2023
Publisher:	IMPRI Impact and Policy Research Institute
Abstract:	Financial inclusion is a critical component of inclusive growth. It is a much-needed intervention for managing financial vulnerabilities, increasing economic resilience by accelerating growth and reducing poverty. Scheduled tribes are the poorest people in India, with 63.68% of Scheduled Tribe households being financially excluded. This study analyses the level of financial inclusion among tribal households in Gondinagar in terms of financial service usage and access, as well as financial awareness. People who live in Gondinagar are members of the Gond community, which is classified as a Scheduled Tribe (ST) and is located in the semi-urban area of the Coimbatore district. Primary data on education, income, expenditure and savings patterns, awareness and use of banking and other financial services were collected from all tribal households of Gondinagar using a structured questionnaire. The findings reveal that although the majority (80.95%) of tribal households had at least one bank account that was mainly opened for savings purpose and to receive pregnancy benefits, around half (53.92%) of those accounts were inactive. Most of the community members were unable to save any money since their daily average household income has been lower than the BPL limit. Female account holders made up around 66.44% of the total bank accounts, which can be attributed to the government’s pregnancy benefit scheme. Despite the strong presence of financial institutions in close proximity to the Gond community, the Gond tribes are found to be financially excluded due to a lack of consistent income, insufficient savings, poor financial awareness, and a low level of education. Simplification of financial assistance and the banking system will enable the tribal population, particularly women, to participate in formal institutions as a means of achieving economic growth.
Page(s):	58-75
URL:
ISSN:	2583-3464 (Online)
Appears in Collections:	IPRR Vol. 2 (1) [January-June 2023]
PDF Link:	https://iprr.impriindia.com/wp-content/uploads/2023/10/SA1_A-Detailed-Study-on-Financial-Inclusion-of-Gond-Tribes-in-Coimbatore-District-IPRR-V2I1_Jan-June-2023.pdf

Financial inclusion is a critical component of inclusive growth. It is a much-needed intervention for managing financial vulnerabilities, increasing economic resilience by accelerating growth and reducing poverty. Scheduled tribes are the poorest people in India, with 63.68% of Scheduled Tribe households being financially excluded. This study analyses the level of financial inclusion among tribal households in Gondinagar in terms of financial service usage and access, as well as financial awareness. People who live in Gondinagar are members of the Gond community, which is classified as a Scheduled Tribe (ST) and is located in the semi-urban area of the Coimbatore district. Primary data on education, income, expenditure and savings patterns, awareness and use of banking and other financial services were collected from all tribal households of Gondinagar using a structured questionnaire. The findings reveal that although the majority (80.95%) of tribal households had at least one bank account that was mainly opened for savings purpose and to receive pregnancy benefits, around half (53.92%) of those accounts were inactive. Most of the community members were unable to save any money since their daily average household income has been lower than the BPL limit. Female account holders made up around 66.44% of the total bank accounts, which can be attributed to the government’s pregnancy benefit scheme. Despite the strong presence of financial institutions in close proximity to the Gond community, the Gond tribes are found to be financially excluded due to a lack of consistent income, insufficient savings, poor financial awareness, and a low level of education. Simplification of financial assistance and the banking system will enable the tribal population, particularly women, to participate in formal institutions as a means of achieving economic growth.

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Introduction

Financial inclusion is a critical component of inclusive growth (Muthuseshan and Mallan, 2020). The Committee on Financial Inclusion defined financial inclusion as the process of ensuring access to financial services, and timely and adequate credit where needed by vulnerable groups such as weaker sections and low-income groups at an affordable cost (Government of India, 2008).  It aids marginalized and low-income groups in having open, safe, secure, and affordable access to various financial products (Gautam and Kumar, 2019) thereby increasing their income, building wealth, and managing risks (Ratnawati, 2020). Additionally, financial inclusion plays a vital role in reducing extreme poverty and income inequality (The World Bank, 2020; Omar and Inaba, 2020). 

Addressing poverty in India immediately takes precedence because it is a generational issue, that perpetuates itself and traps people in poverty unless external interventions are used to break the cycle (Pagani, 2007). The Scheduled Tribes constitute 8.6% of the country’s population and 11.3% of the total rural population, according to the Census report in 2011. They have the highest rate of poverty (45.9%) (IIPS and ICF, 2017). In other words, Scheduled Tribes comprise about one-sixth of all people living in multidimensional poverty (UNDP and OPHI, 2021).  According to the poverty estimates, the percentage of ST people living below the poverty line in 2011-12 was 45.3% in rural areas and 24.1% in urban areas, compared to 25.7% of persons in rural areas and 13.7% of persons in urban areas below the poverty line for the entire population. A substantial disconnect is found between the tribal population and the financial system globally. Even in a developed country like the United States, the Native American tribes have no proper accessibility to financial institutions such as banks, credit unions, and other commercial lenders (Guedel and Colbert, 2016).

In India, nearly half of the poor population lacks access to the formal financial sector (Bhattacharjee, 2014; Rajeev, 2015). Hence, it is necessary to focus on the financial inclusion of the tribal population for their economic security. To comprehend the reach of financial inclusion, it is necessary to examine its impact at the grassroots level in underdeveloped regions like Gondinagar, the chosen study area. Therefore, this paper discusses the variety of social and economic factors that influence this tribal community’s decision to avail of financial services.

Literature Review

1) Access to Formal Finance and Resilience to Financial Shocks

The World Bank’s “The Findex Database 2021” underscores that formal financial access strengthens households and businesses, enabling them to withstand financial shocks more effectively. This aligns with observations from studies conducted across regions, suggesting that those with access to formal finance are better equipped to handle economic uncertainties. However, despite having bank accounts, the Gond community in the Coimbatore District faces barriers in utilizing formal credit, which raises questions about the efficacy of the existing financial services.

2) Women’s Empowerment and Economic Development

The World Bank’s report also highlights that incorporating women into formal finance enhances their empowerment and contributes to economic development. By promoting gender-inclusive financial practices, women can actively participate in economic activities and decision-making processes. This insight holds relevance for the Gond tribes, as policies promoting financial inclusion should consider the specific needs and opportunities of women within the community.

3) Supply-Side and Demand-Side Factors in Financial Inclusion

K.C. Chakrabarty’s (2012) classification of factors influencing financial inclusion highlights both supply-side and demand-side aspects. While supply-side factors such as the availability of financial institutions seem sufficient in the Coimbatore District, the Gond tribes face challenges primarily rooted in demand-side factors. The lack of knowledge and awareness about financial products hinders their utilization, indicating the need for targeted interventions that enhance financial literacy.

4) Financial Knowledge and Mistakes

Research by Calvet et al. (2007, 2009) indicates that low financial knowledge among disadvantaged households often leads to financial mistakes. This resonates with the situation faced by the Gond community, as poor financial awareness may contribute to their hesitance in using formal financial services. Policies and initiatives to improve financial education within the Gond tribes could play a pivotal role in addressing this issue.

5) Illiteracy and Lack of Awareness:

Several studies, including S. Mahendra Dev’s work on financial inclusion (2006) and Sudipta Sarkar’s study (2022) on tribal households in Purulia district, West Bengal, emphasize the prevalent challenge of limited access to formal credit among small farmers and marginalized groups. This issue is also evident among the Gond community in Coimbatore District. Despite having bank accounts, many individuals in the Gond community refrain from using formal credit due to various reasons. Illiteracy emerges as a common impediment in both regions, hindering effective engagement with financial services. The majority of bank accounts in the Gond tribe and the Purulia district remain inactive after initial government transactions, primarily due to the lack of awareness and understanding of financial products. This shared experience reinforces the critical role of addressing illiteracy and creating accessible financial inclusion strategies that align with the educational background of these communities.

6) Informal Sources of Credit

Fungáčová and Weill’s study (2015) on financial inclusion in China emphasizes the prevalence of informal credit sources, such as money lenders and social networks, across BRICS nations. This observation aligns with findings from studies focusing on the Gond tribes, where informal credit mechanisms are commonplace. Understanding the dynamics of these informal systems is crucial for crafting targeted financial inclusion strategies that leverage existing community practices.

Objectives of Study 

• To assess the level of financial inclusion among the tribal people of Gondinagar in Coimbatore district.
• To analyze the involvement of women in the financial inclusion process and investigate various factors that influence the ability of tribal people to use formal financial services. 

Profile of the Study Area 

Gondinagar is asemi–urban area located in the Coimbatore district of Tamil Nadu, India. People living in Gondinagar are Raj Gonds, an indigenous tribe from Maharashtra, who migrated to Coimbatore several decades ago and settled here. The total population of this community in the study area is 635 members, comprising 46.61% male and 53.39% female population. The population is diverse, encompassing various age groups, educational backgrounds, and occupations. Among the total population, 38.11% are below 18 years old, while 6.61% are aged 60 and above. 

Unlike some other tribes in Tamil Nadu, the Gonds do not solely depend on nature for their livelihood. Their traditional occupations include spinning steering wires for trucks, making and selling herbal medicines, and selling dry fruits. Additionally, some community members work as laborers in factories and construction sites. 

In terms of facilities, Gondinagar has easy access to a government hospital and a private hospital located seven kilometers away. Financial infrastructure is also readily available nearby, with various commercial banks such as State Bank of India, Indian overseas bank, Bank of Baroda, Andhra Bank, ICICI, Axis Bank, Bank of India, HDFC Bank, and Canara Bank functioning within a 3 Km radius from the community. Moreover, a post office is located within 2 Km distance. Previously, there was a Self-Help group operating in this community until the pandemic (2020), after which it ceased to exist.

Research Methodology 

The present study is based on intensive fieldwork conducted in Gondinagar, a semi-urban area in the Coimbatore district. A complete enumeration of all tribal households was carried out to examine their financial inclusion status. A structured questionnaire was developed based on a pilot survey, encompassing variables such as education, employment, income, savings, and access to financial services. Interviews were conducted with approximately 93% of the Gond community, covering 126 households. The collected data was then formatted and prepared for analysis. Univariate analysis followed by cross-tabulation (Chi-square test, Regression, and Correlation) of selected variables was performed.

To ensure a comprehensive understanding of the Gond community’s life experiences, this study employs mixed analysis. Solely relying on quantitative data may not capture all nuances, while a purely qualitative approach may overlook important contextual sensitivities. Hence, in this study, quantitative data is supplemented with qualitative analyses, considering common influencing factors in the lives of the Gond community. 

Data Analysis  

Socio-Economic Factors: According to the American Psychological Association, socioeconomic factors may reveal inequalities surrounding wealth, education, or status. These background factors may play a significant role in a person’s life decisions, such as their career or family choices. (American Psychological Association). Socio-economic factors – Education, Employment, Income, and savings have been examined in the Gondi community to understand the nature of their financial decision. 

Education: Table 1 presents the education level of this community. According to PLFS reports, the literacy rate for STs has significantly improved from 47.1% in 2001 to 71.6% in 2021. In comparison, the Gond community’s literacy rate stands at 57.26%. The Gross Enrolment Ratio of ST students at the primary and elementary levels has shown marginal improvement since 2015, as reported by the Ministry of Tribal Affairs (2021-22). This trend is evident in this community, where there is a notably high proportion of enrolment in primary education (i.e., 39.53%) due to free schooling from the Government till Class 12. 

However, as per the AISHE report (2018 – 2019), ST students comprise merely 5.5% of the total enrolment at the Undergraduate level, with figures unknown for Postgraduate and Ph.D. programs. In this community, the dropout rate escalates after secondary education due to limited financial resources and inadequate awareness about higher education, with only 1.1% of students opting to pursue Higher education. Common barriers to education in this community encompass a lack of monitoring, financial constraints, remote village location, and challenges related to the medium of language. Furthermore, there exists a noticeable gap in youth literacy rates between STs and the general population. 

Table 1: Educational Level

Educational Status	No. of Individuals	Percentage to Total Population
Below 7 years	50	7.87
Primary Education	251	39.53
Secondary Education	68	10.71
Higher Secondary Education	9	1.42
Higher Education	7	1.1
Illiterate	250	39.37
Total	635	100

Employment: Table 2 displays the employment status of individuals in this community, revealing that the total labor force among individuals aged 16 to 64 is 65.04%. The community’s labor force participation rate stands at 53.03%, while the Coimbatore district records a rate of 60.44% (Thukral, 2022). Comparatively, the Gond community’s participation rate is slightly lower than the 56.3% rate observed among Indian urban ST populations. Notably, a moderate gap exists between the Tribal population’s Labor Force Participation rate and the combined rate for all categories, recorded at 57.8% in 2019-20 (Ministry of Tribal Affairs, 2021-22). 

In this community, the total female labor force constitutes 66.67% of the female population. Among these, only 22.57% are employed as housemaids or factory workers, while the remaining 77.43% are homemakers. The total male labor force makes up 63.18% of the male population, with 86.1% of them being employed. These figures underscore the gender-based employment disparity within the community. Traditionally, land holds great significance as the nucleus of tribal productivity, symbolizing both prosperity and social status. However, the Gond tribes, having migrated from Maharashtra, rely on alternative sources of employment and engage in fewer agricultural activities compared to other tribal regions. This could contribute to their stagnant employability and lower Usual Principal Status. Moreover, the community’s employment status remains notably low due to the absence of regular, well-paying jobs and comprehensive social security.

Table 2: Types of Employment 

Type of Employment	No. of Individuals	Percentage to Total Employed Labour Force
Self – Employed	160	73.06
Daily wage earners	29	13.24
Housemaids	17	7.76
Salaried Workers	11	5.02
Volunteering and social service	2	0.91
Total	219	100

Income: Table 3 presents the daily income distribution of individuals within this community, ranging from Rs. 80 to Rs. 650. The average daily income stands at Rs.292, with an average family size of 5 members, implying a mean income of Rs.58.4 per person per day. 34.33% of the total population reports having some daily income. However, the remaining 65.67% which includes children (below 16 years), the elderly (above 64 years), and the unemployed, have no daily income. Consequently, 65.67% of the total population, nearly 2/3rd of the community, falls under the dependent population category. This high dependency reduces the financial security of the community.

Table 3: Daily Income of Individuals 

Daily Individual Income	Frequency	Percentage
Up to Rs. 200	71	32.6
Rs. 201 – Rs. 400	119	54.6
Rs. 401 – Rs. 650	28	12.8

Savings: From the data presented in Table 3, it is evident that the daily income within this community is substantially low. Such low-income levels result in a decreased demand for financial services, especially saving products. This trend is reflected in the savings habits of the households in this community. As shown in Table 4, out of the 126 households, nearly 90% were unable to save any amount. Additionally, the number of dependents in these households is high. Some respondents even disclosed that they had to go to bed on an empty stomach. Hence exploring ways of increasing income emerges as an important priority from this dataset. As poverty levels decrease and households move into higher income brackets, their propensity to save increases, which, in turn, leads to higher demand for financial services both for saving and investment purposes (Reserve Bank of India, 2008).

Table 4: Household Savings per Month 

Monthly Household Savings	Frequency	Percentage
No Savings	111	88.1
Rs. 300	1	0.8
Rs. 500	3	2.4
Rs. 1000	9	7.1
Rs. 2000	1	0.8
Rs. 5000	1	0.8
Total	126	100

Access to Banking Services 

The first step towards broader financial inclusion is financial access, which aims at one account per adult (The World Bank, 2020). Among the 126 households in the Gond community, approximately 80.95% possess at least one bank account per household, while the remaining 19.05% lack any such account. Common barriers such as licensure laws, minimum capital requirements, limited access to financing, and security concerns contribute to maintaining a certain degree of distance from banking services. Another issue that needs to be addressed is bureaucratic red tape. In India, about 80% of the adult population owned a transaction account (Klapper et al., 2019). However, within the Gond community, only 37.91% of the total adult population had access to at least one bank account, considerably lower than the national average. Among these account holders, 33.56% are male and 66.44% are female.  

Reasons for Opening a Bank Account: Among the various reasons for opening a bank account, savings top the list, as 39.6% of accounts were opened with the intention to save. 31.54% of accounts were opened to receive pregnancy benefits, while 15.44% were opened for receiving pension, 6.04% for joining self-help groups (SHGs), 4.70% opened an account for LPG, 2.01% for availing bank loans, and 0.67% opened a bank account for insurance. Despite the fact that 40 accounts were opened with the intention to save, only 15 households were actually able to save some amount. Hence, barriers to savings must be reduced.

Source of Borrowing: In terms of availing of loan facilities, 38.1% of households obtain loans from moneylenders, while 32.5% rely on friends and family. Previously, 6.3% of households availed credit through SHGs, which ceased operations in 2020 due to the COVID-19 pandemic. Additionally, approximately 7.1% of households abstain from borrowing altogether. About 4% of total households have acquired two-wheeler loans from banks directly at showrooms. The remaining 12% of households adopt a diverse approach, borrowing from a combination of banks, moneylenders, friends, family, and SGHs. 

Out of the 126 households surveyed, 117 have taken out loans, underscoring the substantial credit demand within this community. However, loans taken from the moneylenders contribute to greater financial strain and unmanageable debt. This further aggravates financial exclusion. A voluntary preference for non-institutional sources stems from the apprehension of loan denials by banks, leading individuals to opt for informal channels. The prevalent dependence on informal borrowing could further burden their responsibilities. Respondents noted that borrowing from friends and family is perceived as a secure and accessible option, a pivotal factor influencing their borrowing decisions.

Table 5: Source of Borrowing

Mode of Borrowing	Frequency	Percentage
Bank and Friends and Family	2	1.6
Bank and Money Lenders	1	0.8
Bank Loan	5	4.0
Friends and Family	41	32.5
Money lender	48	38.1
No borrowing	9	7.1
SHG	8	6.3
SHG and Family and Friends	6	4.8
SHG and Money Lender	6	4.8
Total	126	100.0

Usage Pattern and Financial Awareness 

Although 80.95% of households owned a bank account, the usage pattern and awareness about banking services are very poor among the account holders. Not all account holders possessed ATM cum Debit cards, Credit cards, and Cheque books. Only 59.83% of the households with accounts had ATM cards. A mere 1.59% had credit cards, and 7.94% of them reported using UPI payment apps.  

According to the Global Findex database report in 2017, India had the highest number of inactive accounts (48% of total account holders) globally, with no transactions conducted in the last 12 months. Regular usage of these accounts and the ability to access other financial services of the bank ensures the complete success of financial inclusion. In this community, 53.92% of account holders had inactive accounts, which is higher than the national average.  

Role of Gender in Availing Financial Services

The government of Tamil Nadu launched the Dr. Muthulakshmi Maternity Benefit Scheme in 1987. Under this scheme, impoverished pregnant women are assisted in opening a bank account to receive a financial assistance amount of Rs. 18,000 (this amount has been progressively increased over the years). The presence of a bank account within the household is a prerequisite for household members to access the financial services provided by either the state or the central government. Consequently, 31.54% of the total bank accounts in this community were opened in the name of married females, primarily to receive pregnancy benefits. Therefore, one would expect the number of bank accounts to be associated with no of married females at the household (HH) level.

Figure 2: No of Households with Bank Accounts and No. of Females in Household 

Hypothesis 1

H0: There is no association between the number of married females in the households and the number of bank accounts opened for that household. 

H1: There is an association between the number of married females in the households and the number of bank accounts opened for that household. 

       In Table 6, the correlation between the number of Bank accounts in the household and the number of married females in the household is weakly positive at 0.240, though it is significant at the p = 0.05 level. Several potential reasons might account for this weak relationship, including a lack of timely communication with local sub-centers or primary health care centers, as well as gaps in administrative communication. In numerous households, women received their pregnancy benefits for their first child on time, but the disbursement of benefits for subsequent children was either delayed or not received.

 Table 6: Correlation of Bank Accounts in Households and Number of Females in Households

Note: The base ‘N’ here is only 98 as it excludes households without Bank Accounts and households without females.  

Hypothesis 2

H0: There is no association between Gender and Reason for Opening Bank Account 

H1: There is an association between Gender and the Reason for Opening Bank Account.

The relationship between gender and the reasons for opening a bank account can be understood by analyzing Table 7. The Pearson Chi-Square value (54.5) is significant at p = 0.05. Among the 50 male bank accounts, 37 were opened for saving purposes, while out of the 99 female bank accounts, 47 were opened solely to access pregnancy benefits. Thus, there appears to be an association between gender as a reason for opening a bank account.

Table 7: Cross Tabulation between Reasons for Opening Bank Account and Gender

Hypothesis 3

H0: There is no association between awareness of financial products and the mode of borrowing 

H1: There is an association between awareness of financial products and the mode of borrowing.  

In Table 8, Pearson’s Chi-Square Value (18.56) is significant at p= 0.05. There is an association between awareness of financial products and the mode of borrowing. The data suggests that nearly 89% of individuals lack awareness about financial products offered by banks. As a result, they avail of loans from alternative sources like moneylenders, friends, family, and SHGs. Had the community members been acquainted with PMMY, they could have obtained collateral-free loans at affordable interest rates. Unfortunately, their lack of awareness led them to borrow at exorbitant interest rates from moneylenders. It has been stated that a crucial determinant of an individual’s capacity to make informed financial decisions is their level of financial literacy (Lusardi, 2019).  This indicates that financial literacy has become imperative within this community. 

Table 8: Cross Tabulation between Mode of Borrowing and Awareness of Financial Products

Note: Nine households that have not borrowed were excluded from the above analysis, due to which N = 117. 

Factors Influencing the Daily Income of Individuals

It is widely recognized that the number of years of education has a direct and positive impact on income. However, a substantial disparity in income is often observed between males and females. In the following analysis, we attempt to test these observations using daily income, years of education and gender as indicator variables. 

H0: Years of education have no significant relationship with daily income. 

H0: Gender has no relationship with daily income. 

H1: Years of education have a significant relationship with daily income. 

H1: Gender has a significant relationship with daily income. 

In Table 9, Both Gender and Years of Education are significant. This implies that the relationship between years of education and gender with daily income is significant. By holding the number of years of education constant, we can comprehend the impact of gender on income. The table indicates that for Gender = 1 (for males), there is an increase of Rs. 174 in daily income relative to females. This discrepancy can be attributed to prevailing cultural norms that restrict women from engaging in work outside the home. Inhabitants of this town hold the belief that the workplace security for women is inadequate. Physically demanding roles are predominantly reserved for men, leading to an elevation in their daily income. Conversely, women are typically confined to employment in factories or as domestic aides. Men, having access to a broader spectrum of occupational opportunities, consequently enjoy higher wages. When we isolate the influence of gender, it becomes evident that the effect of years of education on income is comparatively subdued (yielding a Rs. 5.415 increment in income).

Table 9: Factors Influencing the Daily Income of the Individuals 

Note: We used Gender as an indicator variable setting Male = 1 and Female = 0, for this regression model. 

Findings of the Study 

In India around 46.1% of the population is financially excluded (Sharma et al., 2021). While researchers often focus on strategies to encourage the use of financial services among the excluded population, the factors leading to this exclusion are frequently overlooked. As a result, this study investigates the distinct factors contributing to the financial exclusion of a significant portion of households in the Gond community.

Our findings reveal that the average daily household income is Rs. 292, supporting an average family size of 5 members. Within this community, individuals are hesitant to engage with financial services due to their entire income being allocated to daily expenses. This hesitancy is further fueled by a fear of approaching banks stemming from a lack of education. Moreover, community members prefer holding onto cash rather than depositing it in financial institutions due to a heightened sense of security.

A core reason cited by the community for not using bank accounts is the absence of savings, attributed to their low income. The monthly average household income for the Gond community is ₹8760, supporting a family of 5 average members. The Rangarajan Committee’s 2011-12 report states that the basic monthly consumption expense for urban families of 5 was ₹7,035 (Planning Commission, 2014), without accounting for inflation. However, Gond households spend around ₹7,592 monthly, revealing a considerable gap between income and expenses. This income disparity leads to a situation where most households exhaust their daily earnings on consumption, resulting in 89% of the population having no savings. (Among the 11% with savings, 40% are literate while 60% are illiterate). This lack of savings further impedes their access to essential financial services like transactions, payments, savings, credit, and insurance.

Although the awareness of bank accounts is widespread, understanding of the services they offer is limited. One instance reveals that only one person had insurance, but its purpose was unclear to them. Furthermore, despite having identity cards, essential documents such as collateral for obtaining credit from banks are lacking. This is due to a lack of assets, creating a scenario where the community relies heavily on borrowing from friends and relatives, with 32.5% of households engaging in this practice.

Government engagement assumes paramount importance in this context. The government’s role is evident through direct benefit transfer initiatives such as pregnancy benefits and pensions, which have effectively encouraged bank account openings. Notably, 31.54% of accounts were opened for pregnancy benefits and 15.44% for pensions. Self-help groups (SHGs) offered loans to 6.3% of the population until the pandemic in 2020. However, their absence afterward led to increased reliance on moneylenders charging exorbitant interest rates. Consequently, financial service penetration within this community remains extremely low.

Discussion 

Financial inclusion is a key facilitator in achieving 7 out of 17 United Nations Sustainable Development Goals (The World Bank, 2022). The National Strategy for Financial Inclusion (NSFI): 2019-2024 has identified factors such as limited surplus income, unsuitable policies, document deficiencies, and lack of financial knowledge that contribute to financial exclusion. In the context of the Gondi community, it’s evident that most households lack sufficient surplus income to save. Additionally, despite 80.95% of households having bank accounts, approximately half remain inactive due to banks’ inability to cater to their needs, especially concerning small amounts and microfinance services.

Regarding awareness of financial products, nearly 93.65% of households are uninformed. Government initiatives like pensions, scholarships, and insurance schemes such as Pradhan Mantri Suraksha Bima Yojana (PMSBY) and post office schemes like Sukanya Samriddhi Account (SSA) and PM CARES for Children Scheme hold potential benefits for this community. Unfortunately, due to a lack of awareness, accessing these schemes proves challenging.

Addressing irregular income patterns involves promoting savings and entrepreneurship. This dual approach can aid financial inclusion in two ways: first, encouraging savings and bank account usage, and second, supporting credit access through MSME schemes when individuals start businesses. The Pradhan Mantri Mudra Yojana is one such scheme, offering collateral-free loans up to Rs. 10 lakh to micro units or entrepreneurs. This scheme can go a long way in addressing the credit needs of this community since they deviate from the “conventional formal source of credit,”. In addition, this scheme was strongly advocated for aspiring business owners, particularly women and members of minorities.

Easy access to financial services will benefit the vulnerable sections of society by serving two purposes– productive (uplifting small businesses through microloans) and protective (risk management strategies through savings and insurance) purposes. This understanding emphasizes that financial inclusion is a vital intervention in India to break the cycle of low income, savings, education, healthcare, and productivity among marginalized sections, leading to diminished economic growth. This intervention can enable their inclusion in the financial system and uplift them economically within society.

Recommendations and Suggestions 

In the limelight, it is necessary for this community to be financially integrated. There must be a focus on creating awareness and educating people about financial services. An institution like the National Centre for Financial Education was established with the vision to create a financially aware and empowered India. It centers on educating people about financial services through various campaigns. Such campaigns should be extensively promoted in this community to spread awareness about microfinance, post office schemes, banking facilities and other essential information regarding financial literacy.  

Post offices are more effective in handling small amounts and small savings compared to regular banks and other financial institutions, such as commercial banks, RRBs, and NABARD. Post offices are known for their allied financial services in India, including micro-savings and the India Post Payments Bank (IPPB) launched by the Indian Government in FY2018-19. The IPPB provides people access to a formal financial system through door-to-door banking services conducted by postmen. This payment bank is particularly suitable for this community due to its advantages over regular banks. It doesn’t charge fees on cash deposits and withdrawals and offers additional facilities like linkage to other financial products such as life insurance, general insurance, etc. Given its government ownership, it’s more likely to gain the trust of the people. However, these payment banks do not provide credit and loan facilities to account holders. If this payment bank is permitted to offer small loans and advances through door-to-door services, it could effectively help individuals break away from the clutches of moneylenders. Additionally, restarting Self-Help Groups (SHGs) could promote credit lending at reasonable interest rates. Although SHGs had previously proven successful in this community, they ceased functioning due to COVID-19.

The community’s self-employment rate is 72.72%, indicating a keen interest in entrepreneurship and a desire for economic independence. Consequently, various government policies aimed at imparting skills and providing necessary resources for initiating businesses should be made accessible to them. Moreover, only 22.57% of the total female labor force is employed, suggesting that women either don’t prefer or aren’t allowed to work outside due to cultural restrictions. Skills could be provided to these women, and the government could support them in establishing cottage industries within the community, resulting in increased female employment. With an average population age of 25.54, the community has a youthful demographic. This presents an opportunity to create numerous jobs by teaching them entrepreneurship skills. The central government has proposed schemes like the Pradhan Mantri YUVA Yojana, which offers entrepreneurship education, training, and a support network.

Overall, a combination of microfinance facilities from post offices and self-help groups, awareness about financial products and literacy, imparting skills for entrepreneurship development, and establishing cottage industries can enhance the income and savings of the community. This will subsequently boost the utilization of financial services, ensuring the financial inclusion of the community.

Conclusion

Financial inclusion is a widely discussed and debated topic across the world. The World Bank, the United Nations, and Governments aim to integrate people into the formal financial system, providing easy access to various financial products and services. Among other things, poverty is a major issue in India, and financial inclusion is a critical enabler for poverty reduction. When poverty is alleviated, income inequality is also alleviated. As a result, the economy of the country will grow. Hence the central bank, the Union, and state governments have placed such a high value on it.  

Merely having access to a bank account without understanding its purpose and benefits will not suffice. To reach conclusive evidence about the financial inclusivity of the region, research must be conducted by collecting and analyzing data on occupation regularity, daily and monthly income, savings, source of borrowing, risk protection, population literacy, bank account maintenance, awareness of financial products, reasons for opening those bank accounts, and factors influencing financial decisions. Only through such considerations can we ascertain whether the region requires financial literacy or needs to stabilize its income.

Hence, it is clear from the above research that our top priority is to find new ways to increase income for this community. We must devise a differentiated strategy in which those with insufficient income are first trained and coached to increase their income, while those with a steady income are encouraged to save, accumulate, build small capital, and borrow. There are a variety of options available to increase their incomes based on their occupations, and these possibilities can be explored through further research. Simplification of financial assistance and banking systems, combined with tailored financial literacy programs for the people, will undoubtedly encourage tribal people, particularly women, to participate in formal institutions as a means of achieving economic growth.

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