B.5. Mobilization of Financial ResourcesÂ
If a country needs to grow, more goods and services should be produced. The production can be done by government sector, private sector or in PPP mode. But for that, the economic resources of a country should be mobilised.Â
In India, despite having a good savings rate, domestic investment is less. Indians are investing in less productive assets like gold and consumer durable. If India needs to grow, there should be more investments in agriculture, manufacturing or services.
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How does the public sector mobilize domestic resources? |
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How does the private sector mobilize domestic resources? |
The private sector mobilizes the savings of households and firms through financial intermediaries, which allocate these resources to investment in productive activities. |
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Why is Domestic Resource Mobilization (DRM) particularly important? |
In low-income countries confronting widespread poverty, mobilizing domestic resources is particularly challenging, which has led developing countries to rely on foreign aid, foreign direct investment, export earnings and other external resources. Nevertheless, there are compelling reasons to give much more emphasis to DRM.
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