SECURE SUSTAINABLE DOUBLE DIGIT ECONOMIC GROWTH RATE

As India aims to become the world’s third-largest economy by 2030, the financial sector, along with foreign investments in the form of Foreign Direct Investment (FDI) and Foreign Institutional Investments (FII), will play a critical role in fueling the nation’s economic growth. These elements will be essential in achieving India’s ambitious goal by acting as catalysts in several key areas:

Financing growth: Increased access to capital from domestic and foreign sources will support business expansion, infrastructure development, and overall economic growth.

Technological advancement: Investment in cutting-edge technologies such as Artificial Intelligence, robotics, and drones will drive innovation and productivity, fostering a competitive edge for the Indian economy.

Job creation: Greater investment in various sectors will generate job opportunities, boosting employment rates and improving living standards across the country.

Support for sunrise sectors: Emerging sectors like Startups, AI, Drones, and Robotics will benefit immensely from financial support and foreign investments, propelling India’s economic progress.

By harnessing the collective potential of the financial sector and foreign investments, India can effectively navigate towards a higher growth trajectory, ultimately positioning itself as a leading player in the global economic landscape.

The CII Financing 3.0 Summit provided an ideal platform for industry professionals and stakeholders to exchange ideas, forge new partnerships, and contribute to shaping the future of finance in India. As the country continues its journey towards becoming a developed nation, initiatives like these will be crucial in fostering collaboration and driving sustained economic growth.

The Confederation of Indian Industry (CII) successfully hosted the Financing Summit 3.0 from 2nd to 3rd September 2024, with a primary focus on reshaping India’s financial landscape to achieve the ambitious vision of a ‘Viksit Bharat’ or Developed India by 2047. The summit brought together key stakeholders from the industry, government, and financial sectors to discuss crucial topics impacting the nation’s economic growth.

Throughout the two-day event, participants engaged in insightful discussions on various subjects, including global capital flows, infrastructure financing, green financing, and financial inclusion. The summit emphasized the importance of developing innovative strategies to secure sustained economic growth, particularly in achieving a double-digit growth rate.

The Financing Summit 3.0 provided a platform for policymakers, regulators, and industry leaders to share their perspectives on the future of finance in India.

The CII Financing Summit 3.0 served as a critical forum for stakeholders to exchange ideas, collaborate, and pave the way for a robust financial ecosystem that can propel India towards its ambitious goal of becoming a developed nation by 2047.

Key topics covered during the summit included:

The role of FDI and FII in fueling India’s economic growth.

Harnessing technology for financial inclusion and innovation.

Sustainable financing for infrastructure development.

Financing India’s sunrise sectors, such as Startups, AI, Drones, and Robotics.

The valedictory session of the Confederation of Indian Industry (CII) Financing Summit 3.0 on September 3rd featured a keynote address by Shri Ajay Seth, Secretary of the Department of Economic Affairs at the Ministry of Finance, Government of India. In his address, Shri Seth outlined the government’s ambitious goal of sustaining a growth rate of more than 7% over the next two decades to achieve the vision of ‘Viksit Bharat.’ He emphasized the need for reimagining the financial sector to enhance scale, reach, efficiency, and productivity.

Shri Seth highlighted the importance of expanding access to credit products, insurance, pensions, and capital market products to support inclusive economic growth. He also stressed the need for improving service quality, reducing intermediation costs, and deepening bond markets to create a robust financial ecosystem in India.

Recognizing the collaborative efforts required to achieve these objectives, Shri Seth emphasized that no single institution or sector could tackle these challenges alone. He called for cooperation among the government, regulatory bodies, industry associations, and civil society to drive progress and create a more inclusive financial landscape.

Shri Seth acknowledged the significant strides made in financial inclusion, citing the impressive milestone of over 530 million Jan Dhan accounts, a number that exceeds the entire population of Europe. He also pointed out that only 31 out of 19,000 pin codes in India currently lack access to financial products and services, underscoring the progress made in extending financial access to a vast majority of the country’s population.In conclusion, Shri Seth’s address at the valedictory session emphasized the importance of continued collaboration and innovation in the financial sector to achieve India’s ambitious vision of a developed nation by 2047.

Dr. V. Anantha Nageswaran’s addressed at the CII Financing 3.0 Summit

At the CII Financing 3.0 Summit in Mumbai on September 2, 2024, Dr. V. Anantha Nageswaran, Chief Economic Advisor to the Government of India, discussed India’s financial sector growth with a focus on balanced development. The Chief Economic Advisor to the Government of India, Dr. V. Anantha Nageswaran, underscored the need for India to maintain policy autonomy and manage global capital flows to support the nation’s economic growth.

Key Points:

– Financial Sector Responsibility: The financial sector carries significant responsibility as its consequences reverberate throughout the economy and beyond, unlike other sectors.

– The 3Cs: Dr. Nageswaran emphasized “Collaboration, Challenges, and Confidence” as key factors that have shaped India’s economic progress.

– Financial Sector Growth: While India’s financial sector growth has improved inclusion and contributed to economic development, it must be carefully managed to avoid becoming a drag on growth.

– Current Financial Position: India’s stock market capitalization is around 140% of GDP, with the financial sector showing record profitability.

– Risks of “Financialization”: Dr. Nageswaran warned against “financialization” – the dominance of financial market expectations and trends in public policy and macroeconomic outcomes.

– Policy Autonomy: India must maintain policy autonomy and insulate its economy from global capital flow volatility, especially as global capital flows remain robust while trade globalization has slowed.

– Current Economic Position: Despite a modest current account deficit and dependence on global capital flows, India has strong economic growth prospects that should be sustained.

– Cautionary Examples: He pointed to advanced economies that show the negative consequences of excessive financialization: high public and private debt, growth dependent on asset price inflation, and increased inequality.

– Vision for 2047: For India’s goal of becoming a developed nation by 2047, he emphasized avoiding the pitfalls of financialization and maintaining prudent market practices.

– Ultimate Goal: The financial sector should efficiently channel savings to support sustained growth in both the economy and the financial sector itself.

Mr. Sanjiv Bajaj, Past President, CII and Chairman & Managing Director, Bajaj Finserv Limited, emphasized the necessity for a rapidly evolving financial sector, particularly in the digital era. Recognizing the importance of collaborative efforts, Bajaj stated that the CII would submit key recommendations from the summit’s deliberations to the government for consideration.

During the CII Financing Summit 3.0, industry experts and stakeholders discussed pressing issues and opportunities in India’s financial sector. The summit aimed to address key challenges and identify innovative solutions to foster economic growth and financial inclusion in the country. Some of the critical areas discussed during the summit included:

Enhancing digital infrastructure and adopting fintech solutions for improved financial service delivery.

Strengthening the regulatory framework to ensure transparency, stability, and consumer protection.

Promoting financial literacy and inclusion to empower citizens and bridge the gap between urban and rural populations.

Facilitating access to credit and capital for MSMEs and startups to support entrepreneurship and innovation.

Sanjiv Bajaj, Chairman of Bajaj Finserv and former CII President, emphasized bridging India’s SME financing gap at the CII Financing 3.0 Summit, noting SMEs contribute 30% to GDP but receive under 15% of formal credit.

1. He attributed limited SME credit access to structural issues like fragmented financial histories, collateral shortages, and lenders’ risk aversion, perpetuating high borrowing costs.

2. Bajaj stressed the need for increased competition among lenders, drawing parallels to retail lending’s evolution, where competition drove innovation and affordability.

3. He advocated leveraging India’s digital infrastructure, including the Account Aggregator framework, to enable real-time credit assessments using GST, UPI, and bank data.

4. The Open Credit Enablement Network (OCEN) was highlighted as pivotal for standardizing loan APIs, allowing tailored “sachet-sized” loans for SME needs like inventory purchases.

5. Bajaj urged collaboration between regulators (RBI, NPCI), fintechs, and banks to harmonize data privacy norms and expand alternative credit scoring models.

6. Bajaj recommended regulatory sandboxes to pilot innovations like blockchain-based supply chain financing and AI-driven cash flow prediction models.