“If India is to become a $ 5,000 billion economy, we obviously cannot be satisfied with 5-6% economic growth. We have to grow above eight percent, ”Kumar said.
The country must accelerate its economic growth to over 8% to reach its goal of becoming a $ 5,000 billion economy by 2025, said former State Bank of India chairman Rajnish Kumar.
“If India is to become a $ 5,000 billion economy, we obviously cannot be satisfied with 5-6% economic growth. We need to grow above eight percent, ”Kumar said at a virtual event hosted by the IMC Chamber of Commerce and Industry.
For growth of eight percent and above, he said, the country needs a huge investment in the economy, lower tax rates that can ensure a surplus in the hands of the citizens as well as of business, the ease of doing business at the lower level. and the availability of land.
“We need significant private sector investment in manufacturing, agriculture and infrastructure. We cannot be totally dependent on the government to provide all the capital, ”he said.
Kumar added that corporate tax rates in the country have been made reasonable by the government and should not be complained about.
He said that despite a number of reforms undertaken by the government, the investment-to-GDP ratio had not improved.
According to him, there is a willingness to make difficult decisions and initiate difficult reforms at the central government level, but when it comes to execution, there are problems due to bureaucracy.
Kumar said that although the country’s ranking in terms of ease of doing business has improved significantly; but at the district level, obtaining authorizations for the creation of a new unit still poses problems.
“If today you or I want to create a new unit in any district in our country, I tell you it will be a heartbreaking experience. All that ease of doing business will go away when you go to the bureaucracy at the district level and want to start a business, ”he said.
Kumar further said there have been issues around risk management and risk pricing as it relates to the banking sector.
He said the environment and ecosystem around infrastructure is such that if a bank assesses the risk of financing infrastructure, it will not be able to lend more than 16 to 17 percent.
Due to the country’s unpredictable political environment, where a policy can be changed overnight by government, state governments, or local or judicial authorities, banks find it difficult to assess project finance risks, Kumar added.
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