India needs to boost private investment for growth, says Uday Kotak
- Infrastructure logjam needs to be removed
- Government needs to create bigger local private equity pool
Mumbai: India should kick-start private investment via policy measures or tax breaks if it does not want to stay stuck at a 7% growth rate, Uday Kotak, managing director and chief executive of Kotak Mahindra Bank Ltd, told CNBCTV18 in an interview.
"India has the fundamental capacity and we need to create a situation where the ground capacity will be growing at somewhere between 8 and 9%," he said on the sidelines of an event organised by Kotak Mahindra Bank Ltd.
The Reserve Bank of India earlier in the month moderated its growth forecast to 7.2-7.4% for the April-September period, after economic growth in the country fell to a worse-than-expected 7.1% in the July-September quarter.
"We have got to really fix that piece because the key is private investment," Kotak said, late on Thursday in the interview.
The government's decision in November 2016 to suddenly ban large banknotes, so-called demonetisation, and the abrupt implementation of goods and services tax (GST) six months later, hit businesses hard.
The infrastructure logjam that has occurred due to a lack of liquidity in the system, also needs to be removed, said Kotak, whom the government hand-picked to lead major infrastructure financing and construction firm IL&FS after a string of defaults from the firm triggered fears of a liquidity crisis in the non-banking financial company (NBFC) sector.
The IL&FS imbroglio dried up lending from NBFCs at a time when private companies were already dealing with reluctant banks wary of lending due to their massive bad debt woes.
Kotak said that due to the IL&FS debacle, the current situation was fragile, but he added that it was more due to investor fears than a systemic problem.
Still, analysts at brokerage firm Ambit said in a report on Friday that India was headed for a consumption-led slowdown as seen from multiple sector indicators.
This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed
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First Published:15 Feb 2019, 03:43 PM IST
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