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Why is India's Financial Sector in Such Trouble: A Whodunnit?

Ajay Chhibber

Working Papers from The George Washington University, Institute for International Economic Policy

Abstract: India's financial system has never collapsed - unlike many other emerging economies. But it suffers from a deep and expanding silent crisis, which has made it one of the most inefficient and non-inclusive financial systems in the world. This paper unravels the reasons for this deep crisis - who is responsible - the regulators, populist politicians, crony capitalists and India's fiscal dominance. It shows that all the above are culpable. It lays out the major reforms needed and argues that if deep surgery is not performed India cannot emerge as a global economic powerhouse in the 21st century and will remain stuck in a low middle-income trap.

Keywords: Financial Crisis; Public Sector Banks; Financial Inclusion; Banking Reform (search for similar items in EconPapers)
JEL-codes: G00 G01 G18 G21 G32 G33 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2021-09
New Economics Papers: this item is included in nep-fdg and nep-fle
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Persistent link: https://EconPapers.repec.org/RePEc:gwi:wpaper:2021-09

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