India is expected to be a USD 25-trillion economy in 25 years, veteran banker and chairman of National Bank for Financing Infrastructure and Development K V Kamath said on Tuesday.
Kamath also said that he is "sceptical" about the crypto currency and does not see any value in such an asset. "The India that I look forward to, 25 years from now, (will be) a USD 25-trillion (economy)," Kamath said at the Morningstar Investment Conference here.
Earlier this month India became the fifth largest economy in the world, displacing the UK, the Indian economy currently is the fifth largest in the world, now only behind the US, China, Japan and Germany. The corporate India has squeezed its efficiency, which was never believed to be possible earlier. That has also contributed to their (corporates') clean balance sheet and has also made them more competitive, he said. The corporate India has squeezed its efficiency, which was never believed to be possible earlier.
"All this I would think 7-8 per cent growth, we are growing between 8-10 per cent compounded... and you will see where the economy should be in 25 years," he said. Noting that at present the current size of the Indian economy stands at 3.5 trillion, with growth rate at 8 per cent, he said it is expected to double every 9 years.
"A 10-11 per cent GDP growth forecast would make India the world's second largest economy over the next nine years from being the fifth largest at present," he added. "We need to leverage the productivity of our resources and tap into a young tech-savvy consumer base empowered by digital mobility and connectivity to drive the next phase of consumer-led growth," Kamath said.
The onus will have to be on making Indian manufacturing cost and scale competitive and cement India's position as a prominent player in global value chains, which have undergone profound changes in a post-pandemic world, he said. On the crypto currency, Kamath said that, "I echo what the Reserve Bank governor says. As a banker, I don't see value in that asset crypto. So I'm a little uncomfortable.
"What I hear is crypto and blockchain being talked off in one continuum. To me as an engineer, they are not in the same continuum. Blockchain is something else that we use for its own as it were not necessarily putting the crypto tag and all the things that happened with the crypto. So I'm a little sceptical about how it will be," he said. He further said, "as a central bank, digital currency has to happen. Crypto currency, I am not very sure. Efficiency in payments has to happen if blockchain is to provide wonderful, but I think there are other things in parallel also happening. So I think the jury is out as far as I'm concerned." He further said, "as a central bank, digital currency has to happen. Crypto currency, I am not very sure.
Kamath also said all the necessary policies and framework related to NaBFID have been done. NaBFID was set up by the government last year to support the development of long-term infrastructure financing in the country.
"We are on schedule (that) the government has in mind," he said, adding, as many as 12 board meetings of the bank have already taken place. Speaking at the event, Axis Bank vice president and chief economist Saugata Bhattacharya said, "Inflation remains a problem. I don't think just a monetary policy response that is going to moderate this. It has to be coordinated with fiscal, trade and industry policy, even a diplomatic initiative using oil to tame inflation."
Fortunately, in India, inflation is nowhere close to being the problem like the developed markets, particularly in the US where it's not just a price inflation problem, but a wage inflation problem. "So we are much better off and I think that is what is getting reflected in India's attractiveness as an investment destination," he said.
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