India @77 and beyond: Amrit Kaal begins

Independence Day this year marks the conclusion of Azadi ka Amrit Mahotsav

By Prasanta Kumar Tripathy

Despite being so distant geographically, the United States and India share so much of their evolutionary history. The trajectories of both nations were shaped by their struggles for independence and that made “freedom” and “democracy” the cornerstones of their values.

The U.S. attained its freedom earlier, making it the oldest democracy, while the population of India makes it the largest democracy. India is, of course, one of the oldest civilizations and millennia of societal evolution has also shaped its democracy in its own way.

The population offers an immense demographic dividend to India. But, in order to reap it, India would need an array of short-term and medium terms plans, which dovetail into the large long-term picture. A lot has been done and there is still a long way to go.

In the recent past India has made steady progress in improving the infrastructures, both in physical as well as digital. In digital payments, the success of UPI has become the talking points world over. Today, one can see even the smallest denomination money transfers taking place using UPI in all walks of life.

Similarly, the Jan-Dhan bank account opening has resulted in opening of 49.72 crore bank accounts and enabled the government to ensure direct benefits transfer plucking the pilferage so that each rupee spent by the government can reach the final beneficiary.

State Bank of India alone has opened 14.09 crore of Jan-Dhan accounts. Apart from ensuring effective distribution of direct benefits, this has resulted in mobilizing 2.03 crore of deposits for the entire banking system in India. The deposit mobilization has helped the nation in capital formation by bringing the otherwise idle money into circulation.


The success story of the Indian Banking system, particularly the PSU Banks led by State Bank of India is also propelling the growth story of India. Due to the aggressive campaign of State Bank of India in extending Customer Service Points (CSPs) as well as ATMs, now we are almost reaching the last mile as far as extending the banking facility in unbanked areas is concerned. In FY 2022-23 till December, the number of digital transactions topped 9,192 crores, stimulating transactions worth 2,050 lakh crores. This accounts for over 40% of the total transactions carried out during the same period.

At the 77th anniversary of India’s Independence, we stand tall with a solid network of 13 major ports along with 205 minor and intermediate ports, 137 commercial airports and 6.3 million KMs of roads, which is second only to the U.S.

However, if we dream of becoming a superpower and be among the top three economies of the world, and for that there is much to be done.

Presently, more than 70% of our total revenue – revenue receipts and capital receipts, is spent on revenue expenditure i.e. salary, pension, defense, subsidies, freebies etc. In order to generate sufficient funding for infrastructure, we need more tax revenues.

The Aadhar number should be leveraged to connect all bank accounts of individuals. ‘One man, one bank account’ formula may help in catching the tax evaders and reducing overall non-performing loans. Complete digitization of land records across the country will help in bringing land mafias to law and help in combating black money.

Another way to promote investment in infrastructure is through the Public Private Participation model which seems to have found success in other parts of the world. The success rate of this model would also ensure better availability of credit for such projects. It would also encourage more private participants to take part in the India story.

Financing of infrastructure has never been a good business proposition for banks on account of asset liability mismatches, as banks prefer short and medium-term funding while infrastructure projects are long term in nature. Therefore, Term Lending institutions play a vital role. Banks underwrite and participate in the funding of infrastructure projects at the initial stages and after the project implementation the loan is transferred to the books of Term Lending Institutions which is called “Take-out financing”. However, not much has been done in this area to augment the funding of infrastructure.

Foreign Direct Investment (FDI) could also be a good option to support infrastructure. The growth forecast of 6.5% for 2024 should make India a hot destination for FDI. However, successive interest rate hikes by the FRB in the last one year from near zero to above 5% has narrowed down the interest rates between India and US which has induced the investors to look towards the safe haven.

Historically India has remained an agrarian society. After nationalization of the banks, there has been continuous focus on financing agriculture by the PSBs. As on June 30, only State Bank of India has an exposure of Rs 2.29 lakh crores to the agriculture sector. There is an urgent need of improving the infrastructure like electricity, irrigation, backward-forward integrations, sufficient cold storages, food processing units, and seamless transportation to promote agriculture.

Post pandemic, massive supply chain disruption has jolted the world economy. Almost all the countries are trying to relocate their supply chain to counter possible disruptions in future. The concept of ‘Aatmanirbhar Bharat’ is a step in that direction. ‘China plus one’ policy of the U.S. and Europe throws a lot of opportunities at us. With abundant skilled and cheap labor, India is the hot destination for being a manufacturing hub. India responded by welcoming them with “Make in India”. However, such overtures would have to be backed by tangible facilitating steps, for this opportunity to yield benefit for India.

India can generate a lot of value for itself if it can process the raw material available in India and export the value-added products.

India’s balance of trade shows a negative trade balance of $263.08 billion for FY 2022-23. This is a huge drain on our forex reserves. While Mineral fuel and related products, at over 22%, constitute the majority of our exports, oil, at 36%, constitutes the bulk of our imports.

Thanks to the present government, our EXIM policy and Industrial Policy are aligned towards export promotion. We should set up a target to bring down our net imports by 25% in the next 5 years. There is a huge demand for Indian herbs, handicrafts and pharmaceuticals in the US and Europe, which we should leverage.

This could be India’s moment as opportunities are knocking the doors from all directions. India must grab its opportunity to become what it is destined to be. One fifth of the world population is ready to have its tryst with destiny and it cannot wait.

Prasanta Kumar Tripathy is the Chief Executive Officer (CEO) of State Bank of India, New York.

Disclaimer: The views expressed are not necessarily those of The South Asian Times  

Images courtesy of Current Affairs Adda247, PIB and Provided

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