with South Asian Saving Rate?

The paper finds that while India’s GDP growth rate is slowly converging to the East Asian level, its savings and investment rates are not. This raises the question whether India’s growth aspiration is consistent with its savings and investment behavior. The paper examines India’s saving and investment rates—their trends, composition and determinants—to understand how they are likely to evolve in the future. It finds that India’s domestic saving and investment rates are likely to register moderate increase in the medium term, but are unlikely to reach the East Asian level. At the same time, India’s pattern of growth is found to be less intensive in the use of physical capital than has been the case in the East Asian countries. The paper concludes that India could grow at 8 percent, if it can ensure prudent fiscal outcomes (which is found to have a positive effect on aggregate saving) and undertake domestic reforms to attract external capital to fill its emerging saving-investment gap