Question
Household-led savings constitute an important part of capital formation in India. In this context, discuss critically the challenges faced by a savings-led investment economy. What are the other sources of capital formation in India? (10 marks, 150 words)
- Introduce by briefly mentioning the importance of household-led savings.
- Challenges faced by a savings-led investment economy-
- Inflation
- Lack of Monetary transition
- Lack of confidence in the market- market volatility
- Low Financial inclusion and financial knowledge
- Capital output ratio
- NPA
- Explain other sources of capital formation in India.
- Conclude accordingly.
Issues
- Lack of market transmission
- inflation
- lack of investor confidence
- lack of financial inclusion and financial knowledge