Economic Survey Urges Reforms for Sustainable Growth

The Economic Survey highlights the need for reforms in India's financial sector to reduce capital cost, emphasizing productivity, export gains, and domestic savings. It critiques growth reliant on domestic demand and urges attention towards deeper bond markets and credible benchmarks to improve capital allocation and economic resilience.

In its latest report, the Economic Survey has emphasized the necessity for profound reforms in India's financial sector to achieve sustainable economic growth. The document critiques growth patterns overly reliant on domestic demand and credit-driven consumption, which, it says, fail to significantly bolster surplus formation.

The Survey underscores the importance of reducing capital costs not just through better financial intermediation, but also by enhancing productivity, exports, and domestic saving rates. By fostering deeper bond markets and improving risk pricing, these measures aim to alleviate intermediation costs and improve capital distribution across the economy.

Highlighting the current economic conditions, the Survey notes that, while foreign capital can address temporary gaps, a persistent dependence can elevate risk premia. It recommends a shift towards higher productivity and structural savings strength, which are essential for durable economic resilience. Additionally, the document stresses that labour regulation reforms are crucial to facilitate productivity and capital deepening.

(With inputs from agencies.)