Had it not been for demonetisation, India would have taken six to seven years to leap frog into the era of digital banking, according to KV Kamath, the president of New Development Bank.
Demonetisation was the economic activity undertaken by the Prime Minister Narendra Modi-led BJP government, which weeded out 86% of the bank notes in circulation in hope to curb black money and aid digital transformation, causing the biggest cash crunch in the world history.
Speaking to Hindustan Times, the BRICS bank chief also said that the pile of non-performing assets (NPA) that the public sector banks were sitting on needed to be addressed at the earliest.
The former ICICI Bank chief said that higher aspiration of more than a billion Indians could easily push the country’s growth rate to 9%. India’s GDP growth is estimated at 7.1% for 2016-17.
Talking about the challenges in the economy, he said: “There is a need to systemically resolve the issue of bad debt...the finance minister (Arun Jaitley) has said that the issue will be resolved soon. Let’s hope the problem is addressed.”
The idea of a “bad bank” can work only if it has the required funds, he added.
Drawing analogy between India and China, Kamath said that China’s focus on infrastructure and rural sector much earlier, as compared to India, has given it the edge.
The newly launched multilateral agency, set up by the BRICS countries, has plans to lend about $3 billion totally to all its members in 2017. This is almost double of what the 2016 lending figures. India is expected to get about $600-700 million of the total pie.
Kamath also said that more than the global economic slowdown, volatility in every sphere including the commodity and foreign exchange markets was a key challenge that the BRICS countries needed to address.