Union home and cooperation minister Amit Shah on Thursday called upon Indian banks to focus their energies on scaling up and joining the top league globally. He also cautioned them against not paying adequate attention to the micro small and medium enterprises (MSMEs), saying such an approach to lending could seriously impede India’s growth story.
Indian banks must scale up
Speaking at the 17th edition of the FE Best Banks Awards here, Shah said: “Rather than just plan for growth, India’s banking sector should now worry about changing the scale. Our banks should be among the first ten globally… If you (banks) keep the goal small, you will get it soon; keep the goal big, so that you too will grow with the goal.”
In a fireside chat with Financial Express Editor Shyamal Majumdar, and Executive Editor Rishi Raj, the minister made it amply clear that for the private sector-driven investment cycle to take root, financing of MSMEs is critical. “My current thrust is that you finance MSMEs,” he underlined. He recalled that several large conglomerates of the country including Reliance Industries, Adani Group and Torrent Group were also MSMEs at some point.
Reforms & Stable Growth
Shah also asserted that being a coalition government without a single party majority won’t in any way retard the pace of policy-making or scuttle the reforms required to catapult India to the status of a self-reliant developed country by 2047, the 100th year of Independence.
Referring to the slew of policy decisions of great import taken by the Narendra Modi 3.0 government he said: “We do know the art of running a coalition. We have already done it twice before… An alliance can never be a constraint for the development of the country. There is no question of (coalition compulsions) being speed-breaker,” he said.
Shah said when the developed countries are facing growth stagnation, and most of the developing ones are struggling with high debt, India remained the lone bright spot on the global economic landscape.
“It is due to the reforms of the Modi government that analysts across the world are recognising India’s growth story today,” Shah said.
“At this juncture, the Indian economy is vibrant and is poised to acquire its rightful pride of place,” Shah said.
The Modi government’s policies would be guided by the principle of inclusiveness, which is one of the basic tenets of the Constitution, and needs to be manifest in political, social and financial domains.
Stating that Make in India 2.0 would focus on emerging sectors that will be a big part of the global economy in the next 25 years, he hinted that India’s high-tech manufacturing industry would be shifting to high-value-addition segments, which have hitherto been largely out of bounds for it. “Skilling projects have been implemented in a structured way. Manufacturing of semiconductors has arrived here. Now if the chicken has come, eggs will not be far behind.. Why do we have to worry?”
Asked about the strained India-US relations, and the prospects of the ongoing talks for a bilateral trade agreement (BTA) between the two countries, Shah said the negotiations are “at a final level.” “The commerce minister (Piush Goyal) is in the US. It would not be appropriate for me to say anything at this juncture. We should leave it to his and the prime minister’s wisdom. In any case, any decision would only be helpful to India’s economic development. Very soon, everything will become crystal clear.”
“While the developed countries are growing at 1-2%, India’s growth is maintained at 7-8%.We have also consistently maintained a 14% growth in foreign direct investment. This reflects global faith in India’s economy.”
Shah also noted that with the “unprecedented tax reliefs” being given out, including the deep corporate tax cut, tax waiver for individual income up to Rs 12 lakh and the recent round of the Goods and Services tax (GST) cuts, the government has been able to win the taxpayers’ trust. “Even after the corporate tax cut, revenues have only grown,” he noted.
The minister said through policies, production-linked incentives, industrial corridors, logistics parks and Start-up India, a new ecosystem for sustained economic growth has been developed. “ A decade ago we had only 26 start-ups, and today we have 192,000. In the last ten years, India has moved from 26th to 3rd position globally in this sector.”
He listed out electric vehicles, battery technology, green energy, fintech, space and defence manufacturing as areas that would reinforce India’s growth story in the coming years.
The minister also narrated the dismal state of the banking sector before 2014. “Between 2008 and 2014, loans worth Rs 52 lakh crore were given, many of which turned into bad loans. The banking sector was marred by corruption, carelessness and lack of transparency. Prime Minister Modi decided to bring in reforms to clean up the system,” Shah said.
Structural reforms , digital revolution and welfare schemes have been judiciously combined by the government to push inclusive growth, the minister said. Recalling that in 2014, 600 million people belonged to families where not a single member had a bank account, he said the Modi government has extended banking facilities to 530 million people over the last 12 years.
“The new environment of trust and faith in development has not been limited only to Dalal Street. Today Dalal Street has expanded to small villages and from there too, by opening demat accounts, our citizens are contributing their savings into the country’s economic growth,” Shah remarked.
The minister also said one the Jan Vishas Bill 2.0 is enacted, economic laws would be devoid of any criminal provision.
In his address, Viveck Goenka, chairman and managing director, Indian Express Group, noted that the banks are teaming up with digital lenders for co-lending, and partnering with fintechs in a bid to explore what lies beyond traditional channels. He also commended the government’s efforts to prepare the country’s cooperative movement for the challenges of the present times.
Maharashtra chief minister Devendra Fadnavis and deputy chief minister Eknath Shinde were also present on the occasion.