Bullish on India’s digital spectrum contributing 20-25% to GDP: KV Kamath

India leveraging AI well: Veteran banker and Chairperson of the Board of Director of Jio Financial Services, KV Kamath has said that India was on the right track to catch up with the recent trends in Artificial Intelligence (AI), with the help of a push from the ‘Digital India’ initiative of the government.

Amongst the fastest-growing segments in the last 10–15 years is data and IT, said Kamath during an interaction with Republic Business at the fourth edition of Republic Summit. 

Kamath said the overall digital spectrum in India can easily contribute 20-25 per cent to the Gross Domestic Product (GDP).

 

Digital spectrum

Responding to a question on India’s adaptability to new-age technology, Kamath said Information Technology sector has witnessed a paradigm shift in the last few years and would continue to bring innovation in future.
“The digital spectrum at present is contributing 8-10 per cent to our economy.  

A full force of the digital aspect of the economy, has the potential to contribute 20-25 per cent to the GDP,” added the Jio Financial Services Board Chairperson.

Kamath said not just digital finance, but the entire digital spectrum has a potential to see a higher double-digit contribution to GDP.

Capex push  

Kamath, who has been at the forefront of the revival of several corporate houses and is amongst prominent industry leaders, said India has bucked the trend of economic turmoil which has hit many countries. Kamath attributed India’s resilient growth to an efficient regulatory mechanism and a firm policy framework.

“The Covid outbreak led to a crisis everywhere, but India sailed through the pandemic with 25 per cent better productivity as compared to other economies,” said Kamath.

The veteran industry leader highlighted the uniqueness of India’s vast talent pool, which, as per Kamath needs to work in synergy with the efforts of the government and the private sector to ensure that the capex spending is robust.

“The people’s equation is a key to growth apart from the private sector Capex push. Capex in hard infra projects and digital India are tangible allocations, the potential of which even the government has realised,” said Kamath, adding that the manufacturing companies should seek innovative means to ramp up production to meet the market demand.

Kamath pointed out to the sectors which sees the government and private sector companies working together in joint ventures and public private partnership (PPP) mode. He also signalled sectors where private firms were leading from the front all by themselves.

“There are sectors which are seeing a close collaboration of the government and private sector. There are areas where private firms are putting up a spectacular job all by themselves,” said Kamath.

India’s economy, fintechs 

Expressing optimism on India’s growth, Kamath said, “I am bullish on it, and it is not a flash of the pan. The industries have the full support of the government. There is a revised runway to grow, that we all have to capture.”

Responding to a question on how India was placed with regard to the world economy, Kamath, while referring to many other developing economies, said there are a lot of growth stories that will die down as there are no potential sectors in these geographies to push the investments into.

“India is on the right track for a perceivable future. There are all possible avenues that can propel India’s growth story,” added Kamath.

When asked about the recent violations by Paytm Payments Bank, Kamath refrained from directly naming Paytm, but categorically said that the tech companies need to look inwards and require a lot of fact finding to do.

Kamath applauded the role of the regulatory role in clamping down on unauthorised onboarding of customers and to crack down on foreign exchange violations, adding recent incidents in the fintech sector that has proved that the regulator is well aware of the industry happenings.

“A corrective positive needs to be taken. If digital businesses have not  fulfilled regulatory guidelines, it is for them to look inwards. There is nothing wrong with the regulator. Indeed, there is pressure on the banking sector in the wake of fintech growth,” added Kamath.

Banking ecosystem

As per Kamath, traditionally the banks have been generating revenue with the help of massive interest transactions. However, the veteran banker said the evolution of UPI services has minimised the role of the core banking sector.

“Traditionally, banks’ lending to the retail segment made their money on interest transactions, but with the widespread use of UPI, the role of banks has seen a vast reduction. The common street vendor today gets funding through retail vendors, while the role of banks in this case is minimal,” said Kamath, adding that banks will have to reinvent themselves to catch up with the new age technology.  

Elaborating on savings instruments, Kamath said savings in today’s age could be done through several modes and not be just limited to bank deposits which are short term.

“ The way mutual funds, pension and equity have emerged, indicates their further need to grow, and often these are growing at a pace faster than banks,” said the veteran banker Kamath.