​Financialisation of the Economy

The Economic Survey 2024-25 has warned that excessive financialisation can harm the economy, with potentially severe consequences for India.

• Financialisation refers to the increasing influence of financial motives, markets, instruments, actors, and institutions in both domestic and international economies.
• It involves the growing dominance of finance tools in firm management, the impact of financial markets on decision-making, and the significance of the global financial system in capital distribution worldwide.
• It represents the shift from traditional industrial or productive activities (like manufacturing) to financial activities that involve the trading, management, and speculation of financial assets.
• Financialization transforms the functioning of the economic system at both ....