Financial Development and Economic Growth of India

Exploring the Relationship between Financial Development and Economic Growth in India

Abstract

The causality between economic growth and financial development has been a wide-ranging subject of experiential research. However, it is not easy to establish directional causality between them. Therefore, an attempt has been made to realize whether financial development causes economic growth or vice-versa in relation to Indian economy. It is imperative to ascertain the role of financial system in the economic progress of peripheral as well as cosmopolitan economies of the world especially in the light of the debacle of the Greece economy in the recent past. Growing human capital in less developed countries unquestionably needs spectrum of economic activities to imbibe itself in them which vigorously rafter upon the strong financial market of such economy of the world.It has been strongly observed that Indian economy is not growing in consonance with the initiatives that Government of India has taken towards giving impetus to its economic growth. Therefore, it assumes phenomenal significance to have unfathomable analysis and interpretation between two sine qua non variables i.e., financial development and economic growth, which seem to be intertwined with each other. We also endeavor to ascertain whether India is in a better stage in terms of its growth potential and efficient financial system that is likely to evolve in the upcoming years to suit the changing global economic environment or not.