India is closing the year 2023 as the fifth largest economy in the world, with a GDP of over $3.6 trillion. Banker and financial expert Uday Kotak has given his advice on how India can remain on track to become the largest economy in the world.
Kotak highlighted that if this rate is kept stable, India will become a $30 trillion economy by the year 2047.
As part of his “year end musings”, Uday Kotak on X published a financial guide to make India a $30 trillion economy by the year 2047, which is more than the current GDP of the United States. To achieve this, India will have to record 9 percent annual growth, he said.
Kotak wrote on X, “In the early 80s, the Indian saver had low confidence in financial assets versus gold and land. Slowly the saver moved some parts to bank deposits, UTI and LIC.”
He further said, “Even in the 90s, investing in equities was considered “speculative”. Hence companies looking for capital went to the foreign institutional investor (FII). FIIs saw potential and bought into companies while the Indian saver stayed away. Companies raised capital through the less known Luxembourg stock exchange. India’s capital market was being exported. “
Uday Kotak on ‘creating sustained growth’ in India
Uday Kotak, who is the founder of the Kotak Mahindra Bank, highlighted seven main points to make India’s economy grow steadily across the coming decade, which focused on increasing investment and reducing debt.
The banker said that companies should raise equity at lower cost of capital for productive use, which will in turn attract more investors and see a growth in the Indian stock market.
Kotak said, “While we must avoid tax arbitrage in debt, unless debt markets grow it will be a one legged race. The current gap on the highest marginal tax rate between debt and equity of 39% and 10% is perhaps too wide.”
He talked about looking at a shareholder as a partner, and suggested that double taxation on dividends need to be relooked. Low cost leverage through derivatives can distort financial markets, which prompts attention.
The banker suggested that retrospective tax and regulatory regime should be avoided at all costs. He also highlighted two areas where India needs to focus on for steady growth – acquisition financing and streamlining of the IBC/ NCLT process.