New CII President Sanjeev Bajaj on Monday highlighted the need to allow large non-banking financial institutions (NBFCs) to provide full banking services, saying more banks are needed to take banking to every corner of India.
Larger and stronger NBFCs need to be given “more teeth” so that “they not only provide last-mile banking but also provide what banking can provide”, of course, after adequate risk mitigation measures are in place the Reserve Bank of India (RBI) ), Said Bajaj, who is the chairman and MDO of Bajaj Finserv.
Although India has about 500-600 banks, including regional rural banks, the United States has a network of about 26,000 banks, despite being a quarter of India’s population, said KV Subramanian, a former chief economic adviser.
Speaking at his first press conference since taking over as CII chief, Bajaj said the prospect of a normal monsoon season and the central bank’s move to raise benchmark lending rates would help control retail inflation, which “will put us in a better position” in the second half of this fiscal year.
Bajaj said an immediate move to moderate inflation could reduce taxes on fuel products, which make up a large portion of the retail price of petrol and diesel. “The CII will encourage the central and state governments to cooperate in reducing these responsibilities,” he added. Retail inflation reached a 95-month high of 7.73% in April on broad-based growth across food, energy and key sectors.
Supporting privatization as well as asset monetization in the financial services sector, Bajaj said: “Our perception is that the government is committed to this (privatization of two state-owned banks and one insurer, as announced in the FY22 budget). This could be an important signal once they move forward, as it will serve their purpose that the government should not be in business. “
CII, Bajaj said, expects GDP growth to be between 7.4% and 8.2% in FY23, depending on the level of crude oil prices. He added that the average price of 90 90 per barrel of crude oil in FY23 will increase by 8.2%, while the price of $ 110 will bring it down to 7.4%.
Despite the rising interest rate situation, Bajaj said the private capex will witness a broad-based revival in FY23. Some sectors, such as metals, chemicals and mining, have already seen this revival, which will only expand this fiscal year, he added. He hoped that the RBI, which started the cycle of raising repo rates in May, would present “clear guidelines on how they are going to deal with interest rates” at the next monetary policy review in June.
Global headaches and inflation need to be tackled through strong policy reforms, both internally and externally, to unlock the potential for economic growth. Short-term growth-supporting tailwinds include government capx, private sector investment (which shows an increase due to strong demand in some sectors) and production-linked incentive (PLI) scheme, Bajaj said. On top of that, a strong performance in the agricultural sector behind a good monsoon will be a good start for the economy, he added.
Sharing CII’s vision for the economy, Bajaj said India is likely to emerge as a $ 40-trillion economy by 2047 when it turns 100. FY31.
He expected that by 2047, the share of manufacturing in GDP would increase from about 16-17% to 27%, while the share of services would increase from 53% to 55%.