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Chapter 6 examines the empirical evidence for financial access at the sector level, that is, agriculture, industry and services in terms of availability and adequacy of formal financial resources for productive investment. The chapter calculates segment (organised and unorganised) and economy level indicators of financial access for the year 2004—5 and discusses the same. The financial resource gap persists for agriculture sector despite priority sector lending and other policy measures. Significant proportion of unorganised enterprises—manufacturing and services, were outside the formal financial system. Evidence shows that the financial resource gap was the largest for agriculture (49 per cent) followed by service sector (41 per cent) as major part of these two sectors has been unorganised. Financial resource gap is the largest for the unorganised segment of the economy (68 per cent) whereas at the economy level the gap was around 39 per cent.

The last chapter recapitulates the salient features and summary of findings of the study and suggests some policy measures that enhance financial access to real sectors. Empirical analysis of the study clearly indicates that the unorganised segment covering agriculture, micro and small enterprises (in industry as well as services sectors), has limited financial access with wider financial resource gap. The often-cited reasons for the limited financial access of the unorganised segment are—high risk and transaction costs. Hence, solution lies in reducing risk and transaction costs. Majority of the existing policies including priority sector lending do not focus on reducing risk and transaction costs. Microfinance institutions (MFIs) are yet to prove themselves in this respect. These are possible only through the encouragement of local area banks, innovative products linking borrowings to savings and insurance products and either removal of priority sector lending or issue of priority sector lending certificates.

Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. This chapter states the basic research objectives of the study: assessment of the state of financial development and financial access in the post-reform period in India, and two extensions of these objectives, namely, international comparison of specified aspects of the Indian financial sector and the extent of private sector participation. The chapter notes the special features of the study, including macroeconomic growth approach and assessment of financial access in terms of availability and adequacy of financial resources from the formal financial system for the productive investment purpose at different levels of economy.