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Savings and capital formation in India

Author

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  • Patnaik, Ila

    (National Institute of Public Finance and Policy)

  • Pandey, Radhika

    (National Institute of Public Finance and Policy)

Abstract

High levels of savings and investments are key to India's sustained and robust long-term growth. While India's saving rate has declined in recent years, a bigger challenge facing the economy is the intermediation of savings to finance the growing requirements of industry and infrastructure. This paper describes the trajectory of savings and investments in India. The major source of investment in the coming decades is expected to be investment in infrastructure and in micro, small and medium enterprises. The paper highlights the issues in infrastructure and MSME financing and proposes an agenda for reforms. Reduced financial repression, deep and liquid bond markets, improvement in banking regulation, improved access to bank credit to MSMEs should be the agenda for financial sector reforms. A framework for failure resolution of financial firms and a conducive environment for competition in the financial sector should be part of the strategy to promote the rate of savings and capital formation.

Suggested Citation

  • Patnaik, Ila & Pandey, Radhika, 2019. "Savings and capital formation in India," Working Papers 19/271, National Institute of Public Finance and Policy.
    • Handle: RePEc:npf:wpaper:19/271
    Note: Working Paper 271, 2019
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    File URL: https://www.nipfp.org.in/media/medialibrary/2019/06/WP_271_2019.pdf
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    References listed on IDEAS

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    1. C. Badarinza & V. Balasubramaniam & T. Ramadorai, 2019. "The Household Finance Landscape in Emerging Economies," Annual Review of Financial Economics, Annual Reviews, vol. 11(1), pages 109-129, December.
    2. Sikdar, Satadru, 2019. "Rate of Return to Education in India: Some Insights," Working Papers 19/270, National Institute of Public Finance and Policy.
    3. Pandey, Radhika & Patnaik, Ila, 2016. "Legislative strategy for setting up an independent debt management agency," Working Papers 16/178, National Institute of Public Finance and Policy.
    4. Richard Herd & Vincent Koen & Ila Patnaik & Ajay Shah, 2011. "Financial Sector Reform in India: Time for a Second Wave?," OECD Economics Department Working Papers 879, OECD Publishing.
    5. Pandey, Radhika & Patnaik, Ila, 2019. "Fiscal policy cyclicality in South Asian economies," Working Papers 19/268, National Institute of Public Finance and Policy.
    6. Pandey, Radhika & Patnaik, Ila & Shah, Ajay, 2019. "Measuring business cycle conditions in India," Working Papers 19/269, National Institute of Public Finance and Policy.
    7. Patnaik, Ila & Pundit, Madhavi, 2016. "Where is India's Growth Headed?," Working Papers 16/159, National Institute of Public Finance and Policy.
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    Cited by:

    1. Bhattacharya, Rudrani & Tripathi, Shruti & Chowdhury, Sahana Roy, 2019. "Financial structure, institutional quality and monetary policy transmission: A Meta-Analysis," Working Papers 19/274, National Institute of Public Finance and Policy.
    2. Sacchidananda Mukherjee & Shivani Badola, 2021. "Public Financing of Human Development in India: A Review," Indian Journal of Human Development, , vol. 15(1), pages 62-81, April.

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