India’s debt market needs structural reforms to fund its $7.3 trillion goal: Deloitte report

New Delhi: India will have to implement structural reforms in its capital markets if it aims to become a $7.3 trillion economic power by 2030, a report by global consulting firm Deloitte said. The report, titled ‘State of Financial Services in India’, said that as India is growing, the tools required to fund this growth are becoming outdated, and this could result in a bottleneck for economic expansion in the future.

India has, for long, relied on household consumption and savings to fund its debt, but rising demand for debt has made this tool outdated, with structural reforms required to address this.

“Changing household consumption and savings patterns mean that we can no longer rely on bank deposits to the extent we have in the past to fund rising credit demand. To realise the ambition of becoming a USD 7.3 trillion economy by 2030, the debt market must bridge this gap efficiently. Today, it is not equipped to do so,” the report explained.

 To address this, Deloitte has proposed three major reforms- deepening of the debt market by bringing in more investors, transitioning toward market driven interest rates and creating a friendlier environment for global investors. 

Through these reforms, the Indian financial system could support its long-term investment needs as the economy expands over the coming decades. Stronger debt markets, along with improved financial inclusion and greater adoption of AI with higher foreign capital inflows, should become a priority for the financial services sector going ahead, the report added.