The country has been growing at 10% in the last two years and not at 8%, believes ICICI MD and CEO, KV Kamath. He says the index was all wrong and the country has to reset the index.
Kamath said there was a need to recalibrate the weightage given in the manufacturing sector and then the growth rate would be significantly higher. He suggested that the country relook the index of industry group weight in the industrial production. He quoted the examples of textiles industry and the weightage it had it had in the index was higher while in reality many of these industries had closed.
He said the contribution of industry to the GDP would probably go up from 25% to about 30% and services sector would contribute 60% and agriculture the remaining. The way forward is coexistence of the core and the knowledge (as he called the service sector) industry was critical and would lead to transformation, he said at the Praj Annual Address in Pune.
Kamath saluted the industry for what they did from mid 90s and especially since 2000 to reinvent themselves. ?In the late 90s this would have been farthest from our imagination and even as lenders we were worried of industry survival,” he said. They were advised to sell off their portfolio as distressed assets and even 20 cents for a dollar was considered good.
But the industry raised capital, reinvented processes, swept the shop-floor clean, improved quality and became competitive,? Kamath said. ?This was never done anywhere in the world. Credit to the Indian industry that took those steps,? he said. Industry helped the banking system that was saved from systemic risks. ?We did not sell any distressed assets at 20 cents. We did not sell at all. We recovered the entire dollar and also earned interest,? Kamath pointed out.Industry?s investment pipeline has grown from $25 billion in 2003 to about $600 billion to $700 billion in the last one and a half years.