Digital economy will provide the incremental push needed to take India’s economic growth from 6.5% to 8%, said veteran banker KV Kamath.

Speaking at the FE Best Banks Awards, Kamath, chairman of National Bank for Financing Infrastructure and Development (NaBFID), also said India needs half-a-dozen very large banks to meet the funding requirements of the Indian economy, which is set to grow from $3.5 trillion to $10 trillion over the next 10-12 years.

He also defended the Reserve Bank of India’s (RBI’s) decision to focus on a 4% inflation target and not the 2-6% band that has been allowed under the inflation targeting regime. He added that the central bank has set this target due to interest rates hardening globally. “RBI’s decision to set the inflation target has global context,” he said.

Kamath said that he would not like to second guess the RBI’s decision to keep rates unchanged while deciding on open market operations because the management of the economy was quite robust.

Further, he added that the notion that a few conglomerates are making the bulk of investment was incorrect. A large number of companies are contributing to the national growth, he said. The perception that the private sector is not investing is changing as it has started happening.

Talking about granting banking licences to big industrial houses, he said that there is a fear of misuse. But now with the use of technology, all transactions can be tracked.

He said that lack of trust on data is also another issue. The growth at the ground looks more than what is reflected in data. Giving example, he said that after Covid, companies have deleveraged and cleaned up their balance sheet. Their net NPAs have gone below 0.5%, which is a very good development.

Talking about the impact of high crude oil prices, he said India will have to live with high prices and will have to invest in going green. Although India entered late in the field of green energy, it has worked in favour of the country because now it is now more cost-effective compared to before.

https://www.financialexpress.com/policy/economy-digital-will-add-2-to-gdp-growth-says-kv-kamath-3272448/