India Needs To Boost Private Investment For Growth: Kotak Mahindra Bank CEO
"India has the fundamental capacity and we need to create a situation where the ground capacity will be growing at somewhere between 8 and 9 per cent"
Photo Credit : Umesh Goswami
India should kick-start private investment via policy measures or tax breaks if it does not want to stay stuck at a 7 per cent growth rate, Uday Kotak, managing director and chief executive of Kotak Mahindra Bank Ltd, told CNBCTV18 in an interview.
"India has the fundamental capacity and we need to create a situation where the ground capacity will be growing at somewhere between 8 and 9 per cent," he said on the sidelines of an event organised by Kotak Mahindra Bank Ltd.
The Reserve Bank of India earlier in the month moderated its growth forecast to 7.2-7.4 per cent for the April-September period, after economic growth in the country fell to a worse-than-expected 7.1 per cent in the July-September quarter.
"We have got to really fix that piece because the key is private investment," Kotak said, late on Thursday in the interview.
Sluggish private investment growth is a blot on the five-year rule of Prime Minister Narendra Modi, whose ruling Bharatiya Janata Party is often seen as pro-industry.
Modi's decision in November 2016 to suddenly ban large banknotes, so-called demonetisation, and the abrupt implementation of goods and services tax (GST) six months later, hit businesses hard.
The infrastructure logjam that has occurred due to a lack of liquidity in the system, also needs to be removed, said Kotak, whom the government hand-picked to lead major infrastructure financing and construction firm IL&FS after a string of defaults from the firm triggered fears of a liquidity crisis in the non-banking financial company (NBFC) sector..
The IL&FS imbroglio dried up lending from NBFCs at a time when private companies were already dealing with reluctant banks wary of lending due to their massive bad debt woes.
Kotak said that due to the IL&FS debacle, the current situation was fragile, but he added that it was more due to investor fears than a systemic problem.
Still, analysts at brokerage firm Ambit said in a report on Friday that India was headed for a consumption-led slowdown as seen from multiple sector indicators.