THE FINANCIAL SYSTEM IN INDIA
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Abstract
This is a joint study by Hiro-o Hirota, Minoru Fukazawa, Toshio Murai, Fumio Okesha, Shigeyoshi Kamatani, and Yukio Kihara. So far, Japan's interest in the Indian economy has been centred on economic development programmes and foreign trade, and, there has been little comprehensive research on their financial system. The joint research project on India's financial structure conducted recently by five researchers under the sponsorship of the Institute of Asian Economic Affairs is the first undertaking of any magnitude on this problem. The word " financial system " bears various meanings, both broad and restrictive. This research project did not confine itself to finance in a narrow sense, i.e., the structure of capital circulation or tq financial institutions. Rather, the emphasis was placed on clarifying the entire structure of industrial and flnancial circulation of funds in India. As there is a scarcity of original data available, the preparation by the researchers was, of necessity, restricted. Accordingly, this report is, in some cases, an introduction or summary of the data on India, while some portions constitute an experimental type of report not based on extensive research. Therefore, the connection and coordiantion between chapters are not claimed to be perfect; yet, this report is without doubt an important introduction to research on this type of problem in our country. The theme for this joint research report could also be entitled " The source of funds for economic development and the structure of funds demand and supply. " At present, the funds for economic development of India are mainly acquired from three sources : I ) tax revenue; 2) domestic loans, and 3) foreign loans. These three sources will be discussed in the following chapters: tax revenue in chapter one " Structure of Public Finance and Capital Formation "; domestic loans in chapter two " Financial 'Institution "; and foreign loans in chapter five " Foreign Investments. " The structure of money demand and supply will be examined closely in chapter two and chapter three " Agricultural Financing " and chapter four " Foreign Exchange Banks. " Especially in chapter four the histories and the present conditions of the leading domestic and fore.ign banks now in operation in India have been thoroughly discussed. Next, the contents of the various chapters will be reviewed.