The Indian economy is resilient enough to withstand any global headwinds and become a $5 trillion economy in five years by posting an annual average growth rate of 10%, propelled by key growth drivers such as infrastructure, manufacturing and technology-driven services transformation, New Development Bank (NDB) president K.V. Kamath said.
The current downturn in the automobile sector is not specific to India and it is a global phenomenon in which people are increasingly opting for alternative modes of transport, said Kamath, former chief of ICICI Bank Limited who in 2015 took over as the first president of the Shanghai-based NDB, established by the BRICS group that consists of Brazil, Russia, India, China and South Africa.
Car sales in India have declined for nine straight months, with demand for new automobiles in July declining around 30% from a year ago.
“Will India’s growth aspirations be throttled because of this global uncertainty? Answer is very simply no. Reason is -- there is such a lot of developmental work that can be done in India, and I will cite examples of what and how, that will keep us engaged and keep us driving,” Kamath told visiting journalists in Shanghai on Friday.
Kamath was replying to a query about India’s aspiration of becoming a $5 trillion economy at a time of global geo-political uncertainties, a tariff war triggered by the United States under the Trump administration and signs of a slowdown in major European economies. The economy is expected to grow to $3 trillion this fiscal year from $2.7 trillion, finance minister Nirmala Sitharaman has said.
Citing the example of rapid, double-digit growth achieved by China for more than two decades, Kamath said India can leverage the potential of the four-five key drivers to achieve its ambitious target.
India is yet to harness the potential of water and animal husbandry, he said, while infrastructure is an area that requires huge investments.
Kamath said manufacturing is one of the key growth drivers that has received government incentives.
“Still there’s a lot to be done [in that area],” he said, adding that services transformation driven by digitization and technology was another potential growth driver. He said this model can be “scalable and replicable” in other member-countries of the NDB as well.
In his Independence Day speech, Prime Minister Narendra Modi said the government was determined to make India a $5 trillion economy in the next five years through several initiatives, including Rs 100 lakh crore of investment in infrastructure.
“In the last 70 years we became a $2 trillion economy, but in the last five years, we added $1 trillion to the economy. This gives me the confidence of becoming a $5 trillion economy in the coming years,” he said.
At the sixth BRICS Summit in Fortaleza, Brazil, in 2014, member-countries signed an agreement to establish NDB. The first meeting of NDB’s board of governors was chaired by Russia on the eve of the Ufa Summit on July 7, 2015 and Kamath was appointed its president. After the signing of the headquarters agreement with China and the Shanghai Municipal People’s Government, the NDB became fully operational on February 27, 2016.