Mckinsey and Co thinks that Indian government can save huge amount of money and increase GDP substantially by carrying out financial reforms. According to Mckinsey, what Indian government needs to do most is to reduce control on financial system in the country. I am quoting from the website of Mckinsey:
" These shortcomings, along with others documented in the report, impose a heavy cost on India's economy. MGI calculates that an integrated program of financial system reforms could free up $48 billion of capital per year, equivalent to 7 percent of GDP. Even more important, these reforms would raise real GDP growth to 9.4 percent a year. This would increase household incomes 30 percent above current projections by 2014, lifting millions more households out of poverty."
Since, private sector in India is driving Indian economic growth; many observers feel that Indian government should continue its reform policy more aggressively. The report of Mckinsey and Co only made their view stronger. However, carrying out financial reforms is not as easy as many people think. There is pressure from many parties on the government and some reform measures may result into job loss of thousands of workers in state owned organizations.
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