 "K V Kamath")
Indian economy will eventually touch double digit growth rate despite bottlenecks like the stalemate over goods and services tax (GST) as it has conducive conditions, eminent banker and President of BRICS New Development Bank K V Kamath said today.
"I am wearing a different hat. I will talk wearing that hat. India is one of outlier in what is happening around the world. In economic context we are stable. We have both the deficits under control," he said, commenting on the economic survey which predicted 7 to 7.5% growth this year.
"We have very conducive climate with very low commodity prices and low oil prices. This is what is required for driving growth. We have that in our grasp now," he said.
"So I can not think of any other country of this size and magnitude which is poised for growth like India is. So time perfectly is right for India to break out of the shell," he said while talking to PTI here.
"The government has clearly set in motion whole lot of things. They will take time to take root. My view is India is well set to start looking at and start touching double digit growth in the same time period. It won't happen overnight but it will certainly get there. The conditions are very conducive," he said.
Asked about the bottlenecks like the stalemate over the GST slowing down the reforms, Kamath argued that India in the past grew despite facing more severe bottlenecks.
"India had more severe bottlenecks. Ultimately to get out of the bottlenecks, growth is the only palliative. Growth gets you out of the bottlenecks. If you are doing 7 or 7.5% growth, very quickly that growth will have such a transformational impact that it will overcome these bottlenecks. It will have a cascading influence," he said.
"To me it harkens to the year 2000. We were in much more challenging situation in 2000 than today. So to me we are there and ready to get next level," he said.
About problems faced by India in achieving its potential due to political stalemate, Kamath said, "I do not want to touch the political aspect. Ultimately growth happens under in any context. Just look at the period in 1996-99. How many changes we have in the government. But growth transformation kept happening. So that will continue to happen," he said.
"To me the challenge is our ability to clean up what is to be cleaned up. For that look at 2000. In variety of ways the banking systems has been changed," he said.
Asked what reforms he would suggest to the government,
Kamath said that in the long term the government clearly needs to look at banking system significant part of which is public sector banking system.
"The government should make it more vibrant. If that vibrancy is injected we will be firing from all cylinders," he said.
Commenting on a number of Indian banks reporting bad loans, he said, "in a bank having impaired asset is a normal thing. Without naming countries in terms of non-premiering assets, at our stage of development, our non-performing asset situation is nothing to be afraid off."
Asked to compare Indian and Chinese economies, he said "comparison is simple. In 2004, we are four to five years behind China in terms of GDP. For whatever reasons we have fallen behind. Again now we have to see to start growing at speed. Meet the aspiration of people. It is not about speed but meeting the aspirations and challenges of people."
He also played down the hype about India overtaking China by posting better growth rate.
"For me absolute amount is the key. If you grow at 6.5% on $10 trillion balance sheet it is $650 billion and you grow at 10% on a two trillion, it is $200 billion. We need to work harder to meet the peoples aspirations," he said.
