Financial development in India and its relationship with economic growth human development macroeconomic stability

Abstract

The present study has formulated composite Financial Development Index for India based on both financial institutions and financial markets considering Depth , Access , Efficiency and Stability aspects. Moreover, relationship between financial development, economic growth and human development has been examined. Further relation between financial development and macroeconomic stability has also been investigated. Besides, the study also undertakes forecasting of financial development in India. The financial development index for India exhibits fluctuations in reverberation with prevalent state of economic affairs, policy changes and episodes of crisis in global market. Although depth of financial system has improved, yet Indian financial system is confronting the issue of low efficiency and high instability. Besides, financial markets couldn t reach the masses. Financial development has negatively impacted economic growth, inter alia, mainly due to inefficient allocation of resources. Human development is a prime determinant of development process bestowing significantly to economic growth and financial development whilst economic growth has insignificantly affected human development. Macroeconomic stability has positive impact on financial development. Besides, forecasts of Financial Development in India have revealed an increasing trend in ensuing years. Hence substantial efforts are needed to improve efficiency of financial sector, development of human resources and maintaining stable macroeconomic framework. newline