T here has been a tectonic change in some components of the financial sector in the last decade or so. The capital markets have seen phenomenal changes in technology, regulations, institutions and instruments. The banking sector has also witnessed important changes in terms of regulations and instruments. From the period of segmentation in the 1960s and 1970s, capital markets and banking sector entered the period of consolidation in the 1990s. Other sectors like un-organized credit markets have not seen many changes, and therein lie the challenges for the coming decade.
We elaborate on these issues and delineate the possible approaches for reforms in these areas.
The growth rate of different sectors of our economy we find that the service sector is the fastest growing sectors of our economy.
The role of the non-corporate sector is very significant in seven of the service activities, namely (1) construction, (2) trade, (3) hotels and restaurants, (4) non-railway transport, (5) Storage, (6) real estate ownership of dwellings and business services and (7) other services.
The share of the non-corporate sector in these seven activities. We find that the share of the non-corporate sector, consisting mainly of proprietorship and partnership firms, is more than 80% in trade [wholesale and retail] hotels and restaurants, and business services. It is more than 75% in non-railway transport and more than 50% in construction and storage.
Unlike in the developed countries, the likes of Wal-Mart, Sears, or Marks & Spencer in retail trade, or Greyhound or Federal Express in transportation, or McDonalds or Burger Kings and Pizza Huts in restaurants are not as yet the order of the day here. The size of the non-corporate sector in service activities and the phenomenal growth rates achieved in the 1990s needs recognition. In a sense, the Indian economy can be called Partnership and Proprietorship [P &P] economy. |
