Veteran Indian banker Uday Kotak has presented a comprehensive plan with seven key recommendations to propel India towards achieving a $30 trillion GDP by 2047.
In a post on social media platform X, he says, “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. 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.”
Kotak said savers became investors due to the development of mutual fund platforms, cash equities, derivatives markets, insurance funds, and international private equity.
India Today has reported that the seasoned banker offered seven tactical suggestions to bolster India’s economic success story.
To start with, he emphasised avoiding bubbles through strong regulations, efficient policy measures, and guaranteeing the availability of sound investment opportunities. He said businesses needed to raise equity at a reduced cost of capital so that it can be put to good use.
Avoid tax arbitrage in debt
Kotak believes India must refrain from tax arbitrage in debt to encourage balanced growth. Developing more diverse and resilient financial markets requires expansion of debt markets.
Review double taxation on dividends
A reassessment of double taxation on dividends, he feels, is due. He has emphasises a favourable tax regime to boost investments.
Addressing low-cost leverage
He has hinted at the possibility of low-cost leverage via derivatives distorting financial markets.
Stop overreliance on banks
He has highlighted the difficulties the banking industry faces as savers become investors. He suggests that big corporations need to shift significantly toward the capital markets (debt and equity) instead of depending only on banks.
Avoid retrospective tax
He underlined how crucial it is to keep regulations and taxes from being retrospective while still giving businesses stability and predictability.
Focus on acquisition financing
The seasoned banker demanded immediate action in two critical areas for India’s goals: acquisition funding and streamlining the National Company Law Tribunal (NCLT) and Insolvency and Bankruptcy Code (IBC) procedures.