In order to accelerate growth to 8 percent, Economic Adviser (CEA) Krishnamurthy Subramanian has said that India needs to encourage Foreign Capital. He mentioned that apart from sovereign bond issue, India also needs to be tapping into foreign capital to trigger this virtuous cycle. Once this virtuous cycle is triggered, then other parts start moving, then the country get investment with enhanced productivity, exports and jobs, which leads to demand and thereby creates investment again. It is this triggering which is actually important. In budget, the Finance Minister announced that India would issue sovereign bonds in the global market in foreign currencies.
Although, Subramanian stated that the goal is a bit of a stretch, achieving $5 trillion economy by 2024-25 is possible. The Indian economy reached to the level of $1 trillion in 55 years and added $1 million in last 5 years to $2.75 trillion by March 2019.
Besides, talking about bank mergers, he said that mergers are being done based on synergies and the policy on it is to exploit the economies of scale. He added ‘That’s the intent behind the merger. Rather than any top down strategy or mandate which says we need to have four banks, this should be based on looking at banks that might combine very well because of synergies.’
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