Addressing the future of India’s financial landscape, former RBI Deputy Governor R Gandhi stated the need for Indian banks to aim for a position among the world’s top 10 banks.
According to him, achieving this will be crucial for realising the ‘Viksit Bharat’ vision, which is not just a dream but an achievable target.
Gandhi said, “We need to license much more number of banks and financial institutions and this will require large and continuous capital.
Financial services as the enabler of growth
Gandhi remarked that the demand for finance and capital will be central to supporting India’s economic transformation.
To sustain the growth, India must open up foreign holdings and embrace concentrated holdings for banks and financial institutions as the large and continuous capital infusion will be essential, coupled with the development of investment banks, a gold bank, and innovative avenues to mobilise domestic savings. He said that wvey opportunity, small or big towards investment should be taken advantage of.
The central banker highlighted the importance of accelerating capital accumulation, focusing on both domestic and external savings.
Former RBI DG analyses India’s growth path
The vision of a ‘Viksit Bharat’ is rooted in strong economic fundamentals, according to Gandhi. He pointed to Goldman Sachs’ projection of India reaching a USD 75 trillion economy by 2075.
“If real GDP grows by 7.6% CAGR, India will reach high-income status. If we achieve a 9.1% CAGR, India will become an advanced economy,” he said, stressing the need to restructure the economy and strengthen the industrial sector.
Gandhi referred that for India to follow in the footsteps of South Korea and China, who grew at 17.9% and 10.9% respectively during their high-growth periods, India must focus on the external sector and quality infrastructure.
He asserted that the industrial sector should increase its contribution to GDP from 25.6% to 38% to keep pace, with a nominal CAGR of 13.4% over the next 25 years. “We can safely presume that we will be a high-income country,” the former RBI Deputy Governor concluded.
R Gandhi, Former Deputy Governor of Reserve Bank of India was delivering his keynote address at the 19th ASSOCHAM Conference on Thursday held in Mumbai.
