India’s path to inclusive and sustainable economic growth requires empowering marginalized households not just through access to financial resources but also by equipping them with the skills to manage those resources effectively. Two mechanisms—microfinance and financial literacy—have emerged as crucial drivers in this process. While microfinance institutions (MFIs) provide loans and savings opportunities to underserved populations, financial literacy enables individuals to make informed and responsible financial decisions. This paper investigates the combined role of microfinance and financial literacy in fostering financial empowerment and inclusive growth, with evidence from rural Rajasthan. Primary data were collected from 500 respondents in nine districts of Rajasthan—Ajmer, Bhilwara, Udaipur, Jaipur, Alwar, Jodhpur, Bikaner, Bharatpur, and Barmer through surveys and interviews. Statistical analysis, including correlation and regression, was used to evaluate the influence of financial literacy on loan management, saving behavior, and entrepreneurial activity. Findings indicate that financial literacy significantly enhances the impact of microfinance by improving repayment discipline, encouraging savings, and promoting small-scale entrepreneurship. Women, in particular, displayed increased financial decision-making autonomy when literacy training was integrated with microfinance. The study concludes that microfinance alone is insufficient to achieve long-term development. When supported by financial literacy, however, it becomes an effective instrument of empowerment and inclusive growth. The paper recommends embedding financial education within all microfinance programs to align with India’s sustainable development objectives under SDG 8 (Decent Work and Economic Growth) and SDG 10 (Reduced Inequalities).