Discuss the role of capital formation in India's economic development. Would you agree with this view that domestic saving constitute enough potential for development?
Capital formation is necessary for a productive economy. Domestic savings are prerequisites for that. In India, the domestic saving lacks enough potential to generate higher capital. More than 40 percent of the country people are daily wage earners and face problem to make both ends meet and hence no saving. For government, there is always a large social obligation and hence it lacks potential to generate higher capital resource.