India has major opportunities in terms of infrastructure and domestic demand to help it tide through a global slowdown.
India must ensure ease of doing business for local entrepreneurs as well as international investors to guarantee its status as the fastest growing economy going forward.
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- For three years in succession, India will be the world’s fastest-growing major economy.
- Entrepreneurs need the stability of policy and the rule of law in order to register growth.
- For India’s growth trajectory to continue, we must encourage investment in the country.
From 2021 to 2022, India was the fastest-growing major economy in the world. And the trajectory is likely to continue this year as well.
We were the fastest-growing major economy in 2021. We were the fastest-growing major economy in 2022. And in all likelihood, we will remain the fastest-growing major economy in 2023. This is the first time in our independent history that for three years in succession, we will be the fastest-growing major economy in the world.
Can external shocks cramp India’s growth? The answer is in the affirmative. If tomorrow prices rise because of the Russia-Ukraine conflict, our economy will be impacted. If the Fed raises interest rates are far higher than what is priced by the market today, our economy will be affected. However, as long as we make the right decisions and work hard to build our economy’s momentum, we’ll continue to do well.
Watch: Economy: Will India beat the recession?
To continue growing, a couple of things need to be put in place. Number one is investment. Let the world come and invest in India. In 2014, we were getting about 2.1 per cent of global foreign direct investment (FDI). In 2021-22 we received 6.7 per cent of global FDI. If I had a magic wand, I would make it 10 per cent in 2023. It’s a very high target, but as more money comes in, more investments will result in more growth.
The second prerequisite is increasing domestic investments. Instead of Indian savings going abroad and getting invested in gold, it should support the golden entrepreneurs of India. So, one factor is that capital, both domestic and global, must be available. The second thing is if capital is available, then people should also make investments.
Entrepreneurs need the stability of policy and the rule of law. Today, our businessman is like Abhimanyu in Mahabharat. Abhimanyu entered the chakravyuh and was fighting against the Kauravas with the hope that the Pandavas were coming to help him. In India, our entrepreneur is born into a chakravyuh. Not only is he fighting Kauravs that is the market and China dumping, and so on, but also the Pandavs, that are government rules, policies, and regulations.
In my view, the government must ensure support for the home-grown entrepreneur Abhimanyu. We have to ensure that our Abhimanyu receives support. There needs to be genuine support for him so that he can compete in the world. So, we must improve the ease of doing business and give rule-of-law to entrepreneurs; we must provide capital to them and then let the magic work. Indians are great entrepreneurs by nature. The Patels took over the entire motel business when we went to the US. Today, we see that all over the world Indian entrepreneurs are visible. We have to give the same level playing field to the Indians who live here.
Digitisation is our biggest advantage. If one wants to transfer money from one bank account to another in the western world, it takes days, but in India it’s instantaneous. In the western world, if you want a vaccination certificate, it’s physical, but in India it’s available on WhatsApp. Digitisation is improving efficiency. It is increasing productivity. And it is creating multiple opportunities.
This government has done a great job in ease of doing business. However, we have to improve further. The other day, we heard that a German multinational company was putting up a $25 billion investment in China. They are going there because in 12 months their factory will become operational. They are going there because they will get all the environmental clearances in three months. They are going there because the land is given to them on a platter.
We also have to attract large-ticket investments by becoming as competitive as China. We have improved a lot compared to what we were in the past. However, this is like a game of golf. Others are also improving, and hence we must continue to improve as well.
The author is Managing Director at Kotak Mahindra Asset Management
— As told to Amit Ranjan
(Disclaimer: The views expressed in this article are those of the author alone. The opinions and facts in this article do not represent the stand of News9.)