Synopsis: To achieve an annual growth rate of 8-9% by 2036, India will require an investment of Rs 1,094 lakh crore under the "Viksit Bharat" plan. Banks are expected to contribute Rs 323 lakh crore, while equity markets must generate Rs 643 lakh crore. Higher investment rates, increased domestic savings, and a shift from derivatives to spot transactions in equity markets are crucial for meeting these targets and fostering sustainable growth.
The ambitious "Viksit Bharat" plan envisions India achieving an average annual growth rate of 8-9% by 2036, requiring a staggering investment of Rs 1,094 lakh crore.
As per State Bank of India (SBI) chairman CS Setty, this growth is foundational to making India a developed nation and avoiding the middle-income trap.
Breaking down the numbers, banks will need to mobilize Rs 323 lakh crore, while equity markets must contribute Rs 643 lakh crore.
This will necessitate a strategic pivot toward higher domestic savings and robust equity market mechanisms to ensure depth and liquidity.
Setty emphasized the need to increase the investment rate to 35% by 2036, up by 200 basis points from current levels.
Similarly, domestic savings rates must rise by at least 350 basis points to 33.5%, ensuring that the current account deficit (CAD) remains around 1.5% of GDP.
These measures are critical to maintaining financial stability while fueling growth.
In a keynote address at a joint event organized by the Securities and Exchange Board of India (SEBI) and the National Institute of Securities Markets (NISM), Setty elaborated on the roadmap to achieve the "Viksit Bharat" goals.
He highlighted the government's vision of transforming India into a $30 trillion economy by 2047, coinciding with the nation’s centenary of independence.
This ambitious target includes raising per capita income to $18,000 from the current $2,392, necessitating a ninefold GDP growth.
Capital Markets and Funding Challenges:
Setty pointed out that India's capital markets need to supply additional savings equalling 3.5% of GDP over current annual inflows.
On the demand side, achieving a higher investment rate of 35% will require Rs 127 lakh crore in corporate bonds.
With a credit-to-GDP ratio conservatively pegged at 75%, cumulative bank contributions must reach Rs 323 lakh crore by 2036.
Equity markets, too, face monumental challenges. To sustain the envisaged growth, equity mobilisation of Rs 643 lakh crore will be necessary, with a debt-to-equity ratio of 70:30. For this, mechanisms must be developed to encourage open offers over private placements, thereby fostering greater transparency and liquidity in the markets.
Moving Beyond Derivatives:
Setty also underscored the need for equity markets to shift away from derivatives towards spot transactions.
This transition will enhance liquidity and depth in the markets, making them more reliable for investors and better aligned with long-term growth objectives.
Conclusion:
India’s journey toward becoming a developed economy by 2047 hinges on achieving sustained high growth rates over the next decade.
The roadmap outlined by SBI chairman CS Setty provides a clear framework for the financial contributions required from banks and equity markets.
However, the success of this ambitious plan depends on increased domestic savings, efficient capital market strategies, and policy mechanisms that prioritize sustainable and transparent growth pathways.
While the challenges are significant, India's financial ecosystem, with focused reforms and strategic planning, holds the potential to meet these lofty goals and secure its place as a global economic powerhouse.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers are encouraged to consult with financial professionals or conduct their research before making any investment decisions.
