 "Need our own JP Morgans and Citibanks: NITI chief BVR Subrahmanyam")
As India’s economy grows, the country will need its “own JP Morgans and Citibanks” to meet its burgeoning credit appetite, NITI Aayog Chief Executive Officer (CEO) BVR Subrahmanyam, said on Friday.
“If we want to double our economy to $7-8 trillion by 2030, our credit needs are also going to double. Do we have a banking system capable of feeding $1-2 trillion more into our industry?” he said at the Confederation of Indian Industry’s (CII’s) Annual Business Summit.
"We need much bigger banks and more global players. We need a financial sector that has the muscle to service Indian firms not just in India but across the world. We need our own JP Morgans and our Citibanks around the world. That requires forward-looking thinking. Our regulator will have to look at that," he said.
Subrahmanyam also called for reforms in India’s tariff policy, including lower tariffs and ease of procedures for it to be meaningfully included in the global value chains (GVCs).
“India is not a part of GVCs in any significant way and to get into GVCs means a fundamental change in a lot of things. It means low tariffs and low procedures. Things have to move smoothly, seamlessly across borders. There has to be a concerted effort to make India part of GVCs. We look back and get very happy about our performance. But if you look left and right, you see our performance can be much better,” he said.
Subrahmanyam cited examples like auto components, in which India accounts for 2 per cent of the global trade.
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This was among the reforms he cited were the need of the hour for India to become a middle-income nation, aspiring to be developed.
He added that the think tank is working on several of these reforms.
The NITI Aayog is the nodal agency for the Vision 2047 document, a comprehensive report prepared with the inputs of 10 sectoral groups of secretaries, which will encompass present and future-based needs that all these areas will have to cater to over the next 23 years.
The exercise was started by the Cabinet Secretary in December 2021, following which 10 sectoral groups were formed on rural and agriculture, infrastructure, resources, social vision, welfare, finance and economy, commerce and industry, technology, governance, and security and foreign affairs.
Subrahmanyam had also hinted towards the need for reform in trade during the launch of NITI Aayog’s Export Preparedness Index in 2023.
“Bulk of India’s exports are in those products which constitute about 30 per cent of world trade – that means India exports the wrong stuff. We don’t export the stuff which is widely traded in the world. This means our upside is very limited because 70 per cent of the goods that are traded, we do not have a presence,” he had said.
The CEO added that non-tariff barriers such as Carbon Border Adjustment Mechanism in Europe should not be seen as a hindrance for developing economies.
“If you want to sell a product in a particular location, you have to meet the standards of that place. I don’t think these barriers are put up to cut off trade because they apply equally to local as well as foreign, which means it’s a local standard,” he said.
“I think it is time to realise that non-tariff barriers are not barriers. Labour, environment, and other issues are a part of society and if a society imposes conditions there, industry has to adjust. That’s the only way to be competitive. To think that we will be able to change that is futile,” he said.
Subrahmanyam added that discrepancies in standards will not have the need to arise if India’s standards are at par with global ones, and it can also set its standards going forward in areas such as automobile emissions and electric vehicles.
The NITI CEO said that India’s current situation in research and development (R&D) is because universities, industry, and R&D facilities operate in silos and one does not necessarily feed much into the other, adding that India needs to bring them in conjunction, and it will benefit MSMEs the most, as they will be able to engage in independent R&Ds.
The CEO also echoed the concerns of several other experts in the past, that while infrastructure has grown on the back of increased capex by the Centre, there is a need for private capex to flow into the sector if India’s infrastructure requirements have to be met.