India's growth & black money.
R.Vaidyanathan is one of the few keen observers of the political and economic scene in India as is evident from his analysis of India's growth and the black money (DNA,21/12). He has unveiled some important facts which are not clear amidst the euphoria of 8/9 percent growth of the economy. The corporate sector which contributes only about 15 percent to the GDP gets nearly 40 percent of credit ( at the lowest rate of interest) from the banking sector The services sector which constitutes 60 percent of the GDP is driven by the private sector ( trade, construction, hotels etc) gets only about 30 percent institutional credit. He says that 43 percent of rural household and 25 percent of urban household depend on money lenders. The agricultural sector also depends mostly on money lenders ( 50% or more interest rate) and now, on micro-finance companies ( at 24/28 % interest). Is there something wrong with the credit deployment and the rate of interest to various sectors ? One wonders what happened to the promise of helping the small man through nationalization banks 50 years ago?
http://www.dnaindia.com/opinion/column_the-india-growth-story-is-propelled-by-black-money_1483957
December 22,2010.
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