Atmanirbhar Bharat need of the hour, every Indian entrepreneur will battle challenges with fresh spirit: KV Kamath tells Network18
India is a land of opportunities and so there is going to be no shortage of things to do which is unlike several other countries, veteran banker KV Kamath tells Network18, Group Editor-in-Chief, Rahul Joshi in an exclusive interview.
In an exclusive interview to Network 18, Group Editor-in-Chief Rahul Joshi on Tuesday, veteran banker KV Kamath said that Atmanirbhar Bharat was the call of the day and today it was possible to implement the plan, unlike in the past when the execution would have been a challenge in the absence of scale.
Having served at the helm of ICICI Bank and the New Development Bank, Kamath, 72, a mechanical engineer and an alumnus of IIM-Ahmedabad, is being spoken of as someone whom Prime Minister Narendra Modi may tap for a senior role in government. He has a resume that few other possess, as well the skills and contacts that the prime minister may need if India has to quickly aim for double-digit growth.
Kamath said that Indian companies needed to see if some of their requirements could be met locally instead of through imports. He said a larger market place would accelerate the road to the country becoming self-reliant.
Kamath said that the financial health of small businesses would be key in the success of Atmanirbhar Bharat and that credit flow to these firms had to be smooth. He said that funding to MSMEs is backed by government guarantee under the stimulus, and banks must ensure that the chain of credit flow is unhindered. Edited excerpts below:
Let me come to the recent reforms that the government has announced even in the pandemic. If you look at trade, agriculture...in agriculture, commodities have been freed up considerably, coal mining even railways have been opened up. How do you see this in the backdrop of a clarion call by the Prime Minister for an Atmanirbhar Bharat?
I think absolutely spot on, I think Atmanirbhar is the call of the day. I believe today the Indian entrepreneur has a new spirit in it to battle this challenge that they have. I think it is the right time to look at a larger context of Atmanirbhar. My own suggestion in this to operate India in terms of policy would be to see what are the challenges that really corporate India faces in terms of executing on Atmanirbhar. I think we should now look at - this is executable for sure, what are the challenges that are you facing in executing.
My own view is in a historical context, if I look at 10-15 years back maybe 15 years back is a good call, if you were to execute Atmanirbhar, you had a challenge because you did not have the scale. You had industries which were coming out of problems of the ’90s, trying to gear up for a new scale as it were, new quality connotation, new cost connotation, and so on, new competitiveness all that was gained. But still we did not become truly Atmanirbhar in the wider context that the prime minister indicated. Now what we need to really look at is what are those constituents or support that we would need to provide to corporate India and the entire system to make this work.
In one phrase if I were to put it, ease of doing business, can we revisit this whole platform of ease of doing business in a soft sense, not the hard sense, not the sense where you have to set up new capacities or you have to learn how to do business, how you become competitive and so on, but the day-to-day operations and how you get them to be seamless.
I think this I am sure government will do, I am sure industry leaders will work with the government on this front and that will truly be a big step towards Atmanirbhar; that is my view sitting at home, not having my hands into the business, but I can well feel what business is trying to tell and what they are trying to say.
A large part of Atmanirbhar Bharat is also about easing the credit flow to MSMEs, something that you touched upon. How do you think this will play out?
I think there are three components to this in terms of credit. I think one is the cost of credit, the second is the flow of credit, and the third is the momentum of credit – making sure the velocity of money is maintained. I think all three have to be in sync. By lending a large package in terms of guarantee support, honestly, the government has done its bit. We now need to make sure that the banks truly are able to lend this out.
Again, if I look at it, this is government guaranteed money, so can the banks provide it to the business at an even more affordable rate because at the bottom this is government-guaranteed credit. Yes, you must recover your cost of operations and have a reasonable spread, but virtually your risk is coming down. However, at the base, this is government money that the government is standing at your back as it were. So low-cost credit, quick disbursement of credit, and making sure that the chain of credit flow goes unimpaired and unhindered I think is what business and the banks will have to work towards.
On the one hand we are talking about a self-reliant India and on the other we talk about opening up the economy. Some critics argue that this self-reliance could also lead to some kind of isolationism in the Indian economy when it comes to trade with other countries. How do you react to this?
Not at all; I do not think that is true at all I think from several counts. If I look at markets, India is a very large market and as we head towards the $5 trillion economy, and I am clear this country is going to head towards the $5 trillion economy, the domestic market is going to get bigger and bigger which means that domestic companies will have a large space to operate in. Now in terms of how they balance domestic production and domestic supply with access to global markets is something that they will have to carefully work on.
If the feeling is that they have taken it slightly easy, I am not saying they have, this is an assessment they have to do -- they will then have to see whether this particular item could be indigenised rather than relied on imports always. This is the first step we need to take. I am again hearing on news shows, they talk about APIs (active pharmaceutical ingredients), they talk about components for certain manufacturing industries and so on – I think a relook will be taken.
But I think Atmanirbhar to me also means that at the end of the day with all these things, your own strength and leveraging global strength, how do you look at the global market and how do you stand as a player in the global market because that accelerates your path to the $5 trillion economy. Of course, there are several other drivers for the $5 trillion economy, but in the context of Atmanirbhar Bharat, I think that accelerates a larger marketplace.
Other parts about Atmanirbhar as I can see clearly are getting your infrastructure in place. Again, rapid progress has been made, but we could look at the same thing that we probably could do in the manufacturing side -- what are the soft issues that are a challenge on the infrastructure front, how do we address them. This is something that we could do apart from rolling out infrastructure.
I see one challenge -- you talked about deficit and funding, I think one challenge that we will hear increasingly in the next one year is how do we meet our infrastructure aspirations given the challenges that we will have on the fiscal front. This is something that the government will need to think through. As I said, maybe it is time for a new normal, not look at old concepts of deficit financing and so on as long as we are sure that we can keep the fabric intact.
So, there are I would think of many aspects to Atmanirbhar Bharat. India is a land of opportunities and so there is going to be no shortage of things to do which is unlike several other countries. They are searching for what is it that you can do to drive growth, we do not have to do that. We have unfinished agendas in almost all areas that we look at whether it is providing housing to our masses, whether it is providing robust infrastructure, whether it is keeping up the infrastructure chain, whether it is manufacturing, whether it is food products, I think we have enough to do to grow at a rapid rate -- by rapid rates I would think double-digit growth for a very long period of time. By a very long period of time I mean upwards of 10-15 years for a minimum but upwards of 15 years. So, that is what you will need to truly transform this country.
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