
10 India’s Financial Markets
a flow of annual saving of $300 billion, a certain fraction of which flows into
the financial system.
Quality of Capital Allocation
The financial sector controls the efficiency with which incremental capital for-
mation is converted into incremental GDP. India has fared unusually well, when
compared with other emerging markets, in fostering a well functioning financial
sector.
Many countries all over the world have experienced problems with bank-
ing. Difficulties in banking escalate into major macroeconomic problems
when the banking system is itself large, when compared with GDP. In India
today, bank deposits are just 48% of GDP ...