Financial Inclusion, Digital Payment Growth, and Macroeconomic Dynamics: An Empirical Study of the Indian Economy

Abstract

This study explores the intertwined dynamics of financial inclusion and digital payment growth in shaping macroeconomic outcomes in India over the past decade. Using multivariate regression analysis on time-series data from 2015–16 to 2024–25, the research investigates the impact of the Digital Payment Index (DPI) and the number of Jan Dhan Yojana (PMJDY) accounts on GDP per capita. Results reveal that financial inclusion, proxied by PMJDY account expansion, significantly contributes to GDP growth, affirming the role of foundational financial access in economic development. In contrast, the DPI—while reflecting exponential digital adoption—did not show a statistically significant short-term impact on GDP, suggesting a delayed or indirect influence of digital payments. The findings are situated within the frameworks of Endogenous Growth Theory, Financial Intermediation Theory, and the Inclusive Growth paradigm, offering critical insights into the policy design of India’s financial and digital infrastructure. The study underscores the importance of integrated policy strategies that bridge financial access with meaningful digital usage to realize inclusive, sustainable growth.