An Empirical Analysis of the Performance of Some Indian Development Financial Institutions

Development Financial Institutions (DFIs) have been an integral part of India’s developmental strategy. However, the economic crisis in the early nineties and the consequent paradigmatic change have perhaps necessitated a fresh look and evaluation of the performance of the DFIs which may, hence, help us to take a view about their continued relevance. In this paper we first briefly look at the origin and role of some of the DFIs and undertake the so-called Subsidy Dependence Index (SDI) analysis for a select set of DFIs, viz., IDBI, ICICI and NABARD. This SDI analysis is supplemented by another tool called Implicit Cost of Resources which is devised with the help of SDI figures. Both these parameters try to give a better estimation of the burden of subsidies borne not by the DFIs but rather by the economy at large.