By Dipankar De Sarkar, IANS,
London : The Indian economy is on course to achieving a 10 percent growth rate “over a sustained period”, India’s most powerful private sector banker said here Thursday.
The remarks by ICICI Bank CEO K.V. Kamath came after Commerce and Industry Minister Kamal Nath told a gathering Wednesday night that recent inflationary pressures had caused growth to dip by one percent to 8.5 percent.
Kamal Nath, who was supposed to have addressed Thursday’s meeting, cut short his visit to London to attend to urgent business back home.
Another absentee at the event was Planning Commission Deputy Chairman Montek Singh Ahluwalia, who was awarded an Oxford doctorate Wednesday and is scheduled to leave for India Friday.
Kamath told a meeting of prominent Indian and British businesspeople and entrepreneurs here that the biggest driver of the Indian economy was the service sector, which accounted for 60 percent of India’s gross domestic product (GDP) and was growing at the rate of 10 percent.
Neither the proportion of the service sector in the economy nor its rate of growth had shown any signs of dipping and were expected to remain roughly at the same levels in the future, said Kamath.
The CEO of India’s largest private sector bank was speaking as president of the Confederation of Indian Industry (CII) at an event where other speakers included Liam Byrne, Britain’s minister for the Midlands – home to 90 percent of the country’s Indian-origin population, Indian High Commissioner Shiv Shankar Mukherjee, economist Lord Kumar Bhattacharya, and several business leaders such as Karan Bilimoria, Analjit Singh, Malvinder Singh and Phiroze Vandrevala.
Kamath said another reason for basing his 10 percent projection was that the Indian manufacturing sector was poised to spring back “very strongly” after a period of “deep pain” from 1996 to 2002.
“It is now an entity that is lean, financially well-structured and with a global mindset,” he said.
However, he said some inflationary pressures and, what he called, “environmental issues” could slow down growth in the short term.
Mukherjee said a trajectory of 10 percent or more was not only achievable but could be sustained over a long period because India’s democratic process ensured that all the diverse sections of the country were part of a consensus on economic reforms.
“Let’s not stop at 10 percent. But I’d rather have a 10 percent growth rate that everybody agreed with,” Mukherjee added.