Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
4) What is Development Finance Institution? In what way is it different from commercial banks? Discuss the need for India to have DFIs to Fund Infrastructure.(250 words)
Why this question:
Recently The government has proposed to set up a development financial institution (DFI) to solve the infrastructure financing needs of the country.
Key demand of the question:
The question is straightforward and is about discussing the significance of development financial institution (DFI) and how it is different from commercial banks and its relevance in infrastructure funding.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You must give reasons for both for and against arguments.
Structure of the answer:
In short explain DFI.
Explain what is DFU, what are the advantages of having DFI.
Discuss in what way they are different from commercial banks.
Then move onto discuss why India needs DFIs to Fund Infrastructure?
Conclude with the significance of DFI for Indian infrastructure sector.