OECD Economic Surveys: India 2007
OECD's first economic survey of the Indian economy. It opens with a broad overview of economic developments over the past twenty years, showing how India has grown to become the third largest economy in the world. It then examines a series of specific policy areas including the unbalanced growth across states, competition policy and reforming India's product and service markets, improving the performance of labour markets, improving the financial system, improving the fiscal system, improving infrastructure, and upgrading the educational system. For each policy area, a series of recommendations is made. This book includes StatLinks, URLs linking tables and graphs to Excel® spreadsheets with the underlying data.
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Reforming the financial system
This chapter examines the performance of India’s financial sector and compares its structure to that of other emerging economies. The financial sector went through a period of considerable re-organisation during the last 15 years. New regulators were introduced for all sectors of the market and this has boosted the development of highly efficient equity and commodity markets. The health of the banking sector has also improved and competition within the sector has increased. Nonetheless, costs remain high in a sector that is still dominated by public sector banks. The corporate bond market is still underdeveloped, as is the foreign exchange market. Considerable scope exists for improving efficiency in the financial sector by opening it to more foreign direct investment and removing a number of regulatory constraints that impede the development of a full set of financial markets.
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