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India blooming: World Bank

Vibrant Gujarat Summit served as a launching pad for prime minister Narendra Modi to make a strong `Make in India’ pitch to the global CEOs, bankers and world leaders, who increasingly consider India as an attractive economy

For investors, entrepreneurs and CEOs thinking of doing business in Gujarat and the country as a whole, there’s much reason for optimism. Jim Yong Kim, president, World Bank Group, said at the Vibrant Gujarat Summit: “We project that India will be a bright spot in an otherwise mediocre global economic outlook. According to our projections, its economy is expected to grow 6.4% this year and even faster in 2016. In addition, prime minister Modi and his government are quickly putting in place the building blocks for even more rapid growth, streamlining the national regulatory structure, using public funds more efficiently, and promoting social inclusion.”

Kim praised Modi’s ‘Make in India’ campaign, efforts to reform the Goods and Services Tax, the phasing out of diesel subsidies and steps to create a more inclusive society.

World Solar Leader

The government has set an ambitious target of using solar power to produce 100,000 megawatts of electricity by 2022, or over 12% of the country’s projected demand. According to Kim, the World Bank is helping to design the solar parks and farms, grid upgrades and non-grid solutions to meet this target, making power both more available and accessible. It also has plans to provide billions of dollars in financing to make these designs a reality. “Combined with the technical expertise we’re providing states for the ‘24/7 Power for All’ initiative, this effort will create growth that is sustainable and inclusive through a strong solar energy sector and more energy for everyone, it can make India the world leader in solar energy,” he adds.

$100 bn Forex

According to a forecast by Kaku Nakhate, India head of Bank of America Merrill Lynch, there will be a 5-fold rise in forex debt raising by domestic corporates to a record $100 billion over the next 2 years. As much as $21 billion has been raised by Indian firms in foreign bond sales last year from a just $16 billion in 2013. She added: “In fact, we are thinking of smart cities which can easily be financed by appropriate instruments like municipal bonds and securitization. The changes in foreign portfolio investment regulations will attract new kind of inflows, beyond the conventional ones.”

Global Praise

US secretary of state John Kerry was impressed by what he saw: the number of businesses, enthusiasm, energy and excitement of people to engage in entrepreneurial activities not just with the US but worldwide. “It’s palpable, you can feel it, you can touch it,” said he.

British trade and development minister Lord Livingston said the British government will open a new deputy high commission office in Gujarat in a few weeks.Yosuke Takagi, Japan’s minister of economy trade and industry, said, “In 2014 alone, 1000 Japanese companies have invested in India. We plan to `Make in India’ from Gujarat.” Australian mining giant Rio Tinto’s CEO Sam Walsh said the group would add 30,000 jobs in diamond cutting industry in Gujarat. Netherlands’ Foreign Trade Minister Simon Smits said India should focus not only on ‘Make on India’, but also on ‘Research and Design in India’.

Hybrid Instruments

Arundhati Bhattacharya, chairman, State Bank of India, chose to underline the ways and means to contain the rising NPAs in the banking sector. Calling for innovative lending to contain NPAs, she said: “Banks need to be more responsive to needs of borrowers rather than sell standard set of products. There are lots of hybrid instruments that can be looked at. There are ways of structuring loans so that we capture the cash-flow as it comes, rather than give a repayment schedule that is unrealistic and which cannot be met.”

Indicating the areas wherein the banks can increase its lendings, she said: “There is a high requirement of capital in farm sector due to increased mechanization. The rapid growth in small businesses in India offers an interesting opportunity, at present only 1 in 4 SMEs takes advantage of formal financing. Banks should evolve technologies to catch micro aspects like cash-flows of the companies so that lending calls become easier. For the mid-corporate segment, hand-holding by banks and other institutions is necessary at the time of growth catapulting exercises like capital-raising.”

IT to Complement FinServ

Saurabh Patel, minister of finance, Gujarat said Gujarat is now focusing on development in financial services sector and GIFT city would become pivotal point for the growth in the segments that are yet untapped. Government of Gujarat has announced IT policy which would complement growth of financial services sector

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