Report of the Committee on Financial Sector Assessment (CFSA) 2009

REPORT FINDINGS

Sustainability of Macro Economic Growth

India’s growth in the recent period is contributed by several factors. These are high domestic demand, productivity, credit growth and high levels of savings and investment. The current global financial crisis, however, has resulted in the outlook being uncertain in the short term. Though India may face deceleration in its macro economic growth in the short term, 8 per cent plus growth for India is sustainable in the medium-term. For growth sustainability, however, India needs to focus on revival of growth in agriculture, address quick restoration of the fiscal reform path, continue financial sector consolidation and development and address the infrastructure deficit. While fuller capital account convertibility (FCAC) is desirable, it should be concomitant with macroeconomic and market developments.

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