29th in terms of its average growth rate in the 1980s, 27th in the 1990s and 26th during the last decade. Even during the heady days of robust, fast-paced growth 2003 to 2007, India’s ranking at 24 remained in this narrow band because ‘a rising tide lifts all boats’. With global growth decelerating, India’s GDP growth in FY 13 is likely to be sub-6% in FY 13, placing India somewhere between 25 and 30 in the global pecking order. Driven by 13% nominal annual growth rate India’s GDP is set to quadruple over the next ten years to reach USD 4.5 trillion by 2020. Goldman Sachs projected India to be the third largest economy by 2030. STRENGTH AND RESILIENCE- OUTPERFORMED MOST ECONOMIES POST-REFORMS Despite the global financial meltdown, the Indian growth story remained intact largely because of India’s democratic polity, sequential economic reforms, prudential regulations and RBI’s calibrated policies. Indian economy recovered fast because of strong banking system, rising industrial output, improving exports, increased consumer spending and stock markets. The strength and resilience of the Indian economy was reflected in out-performance despite ravages of the global financial crisis; strong domestic demand and sustained increase in per capita income. Let me do some number-crunching. India is the fastest growing economy (next to China); high foreign reserves ~ 4th largest in the world; rising per capita income ~ increased standard of living; higher disposable income; high telecom penetration ~ urban (103%), rural (18%); 525 million mobile users (2nd largest); demographic advantage ~ young work force (43% of population); major agrarian powerhouse. Going forward, strong ‘domestic consumption story’, high domestic savings, favourable demographics and sustained increase in per capita income will ensure continued economic growth. UNFINISHED DEVELOPMENTAL AGENDA The challenges of the present and the expectations of the future necessitate a leveraging of Demographic Dividend. The share of banking and insurance in GDP and share of banking and insurance in services has risen progressively. Bank credit to GDP stood at 55 % in 2009-10. It was, however, lower than Hong Kong (150%), China (136%), Taiwan (126%), Singapore
(109%), Malaysia (107%), Korea (107%), Thailand (81%), etc. Credit has to expand for sustained growth of income and employment. FUTURE GROWTH PROSPECTS Compared to EMEs and China, the Indian financial sector, particularly banking is more efficient. There are, however, persisting issues, e.g., lack of real progress on reformsgreater FDI, easier labour laws and disinvestments, possible rise in inflation and interest rates and lack of headway in critical infrastructure. These factors require an accent on manufacturing resurgence, agricultural transformation, reduced regional disparities and focus on employment, health, education and gender equality. Banking needs reoriented development strategies; increasing productivity- reforming labour laws, financial systems, legal environment, non-tariff barriers, more market-friendly investment policies; widely disseminating benefits of growth in technology and innovation. BANKING-ECONOMIC GROWTH DRIVER Indian banking is relatively much stronger vis-à-vis other Asian counterparts in terms of product range, range of
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