Editor’s Note: In order to sustain its growth and economic opportunities, India now looks to financial sector reforms as a crucial step to maintaining its trajectory. In this article, Eswar Prasad, an expert on the global economy, and Raghuram Rajan establish a blueprint for financial sector reforms to support India’s economic growth.
India has grown by leaps and bounds in recent years and is emerging as a major world economic power. After lumbering along at a pace of about 4-5 percent GDP growth a year in the 1980s and the 1990s, the economy has surged in this decade, posting an average annual growth of 8.5 percent since 2005 (see Chart 1). The challenge now is to maintain this growth momentum and provide benefits as well as economic opportunities to a broad swath of the population.