Article at a glance:

India's financial system: More market, less government

• Given the country's 130-year-old stock market, established private banks, and Anglo-Saxon legal traditions, it may seem surprising that India needs a more market-oriented financial system.
• The system remains heavily under the control of the government, which channels nearly 70 percent of India's domestic savings into the public sector.
• India's private-sector companies, which are more productive, pay interest rates that are, on average, nearly twice those paid by their Chinese counterparts and rely much more on retained earnings than do other Asian companies.
• To create a well-functioning financial system, India's government must relinquish its hold on domestic savings and cut its deficit.