Theyear gone by has seen several developments in the economic landscape
in India and globally. The United States has shown signs of recovery,
and global financial markets have been relatively stable. At the same
time, continuing concerns over the fiscal position of countries in
Europe, events in the middle-east and north Africa, rising oil prices
and emerging inflationary trends in many countries have emerged as
challenges impacting the global growth outlook.
India continues to be well-placed to achieve robust economic growth, in
a challenging environment. Investment in infrastructure, urban
development & rejuvenation, the growth of the rural economy and
financial inclusion will be the key factors that will shape India in
the coming decade.
Investment in infrastructure will be a key driver of Indias growth in
the coming years. The Government of India is targeting infrastructure
investment of USD 1 trillion between 2012 and 2017. This will cover the
whole gamut of infrastructure that forms the backbone of an economy:
power, communications, transport, water resources management and so on.
An investment of this magnitude will have significant positive
implications for the economy, in terms of improvement in productivity,
demand for various input goods and services, job creation and income
Economic growth and investment in infrastructure will drive urban
development and urban rejuvenation. This will take many forms -
modernisation and redevelopment of existing large cities; expansion and
upgradation of existing second-tier cities that are emerging as
important engines of growth; and the creation of new towns in corridors
of infrastructure development and industrial investment. Growing
urbanisation will spur demand for a range of services and sectors and
improve standards of living.
Rural India has over the years emerged as an important driver of
Indias growth. The rural economy has become diversified, and rural
India is now estimated to account for close to half the countrys GDR
Thus, rural India contributes significantly to the industrial and
services sectors, in addition to the agriculture sector. It also
represents a large and fast-growing market for many goods and services.
Government policies and schemes introduced over the last few years have
enhanced the resilience of the rural economy. The growth in per capita
incomes in rural India will lead to accelerated reduction in poverty
and socio- economic inclusion, and have significant positive outcomes
for the economy as a whole.
The engagement of a much larger section of our population in the
economic mainstream through financial inclusion will be a key feature
of our growth going forward. Developments in low-cost information and
communications technology and the unique identity initiative have the
potential to rapidly accelerate financial inclusion by reducing the
costs of providing access to basic financial services, both in terms of
initial enrolment and ongoing servicing. Banks are already working on
business models to serve the un-banked segment through deployment of
innovative solutions, and this will gain momentum in the coming years.
Investment in social infrastructure - healthcare and education &
training - is key to realising the benefits of our demographic dividend
and spreading the benefits of growth. Here too, a range of initiatives
are being taken by both the government and the private sector. There is
recognition that building capacity among the poor to lead healthy and
productive lives through access to basic healthcare and relevant
primary and vocational education is essential for long-term,
sustainable growth. It is essential for Indian business to be
competitive and maintain healthy growth; and it is essential to the
larger national goal of inclusive growth and prosperity.
There will no doubt be challenges along the way. The most immediate
issue that policymakers are concerned with is inflation. This is in
some ways a global phenomenon that is accentuated in India by our high
economic growth and consequent increase in demand. Various measures are
being put in place to address this, including monetary measures to
contain demand side pressures. The results of these will be witnessed
The ICICI Group is a key player in Indias economic landscape. The
management has in place a well thought out strategy for each segment of
the financial services sector, catering to the diverse needs of
customers across the spectrum. This strategy is being executed within
a sound governance framework that seeks to balance the interests of all
stakeholders to ensure sustainable value creation.
Let me end by saying that India is a land of great opportunity. The
rapid changes of the last decade are only a precursor to the much
greater growth and prosperity that we can achieve in the coming years.
The ICICI Group is well placed to benefit from these opportunities.
With best wishes,
K. V Kamath