India’s economy could see growth rates of around 8 per cent in the next two years, driven by the country’s favourable demographics, according to a former head of the country’s largest commercial bank.
Speaking in Abu Dhabi on Wednesday, Arundhati Bhattacharya, former chairperson of the State Bank of India, one of the country’s largest public lenders, said a growth rate of 8 per cent is “something I believe will happen.”
Her comments come after economists had speculated that economic growth would slow down in the country as a result of demonetisation policies and the goods and services tax system implemented last year.
The Indian economy is forecast to have grown at a 6.7 per cent rate in 2017, and is predicted to pick up to 7.4 per cent in 2018, as per projections from the International Monetary Fund.
Speaking at the Global Financial Markets Forum, Bhattacharya also said that India’s banking system needs to strengthen governance in order to avoid more corruption and fraud cases.
Her point on governance came as she was discussing the latest case of a nearly $2-billion fraud at the state-run Punjab National Bank (PNB) that came out two weeks ago.
PNB has lost about a third of its market value and is facing rating downgrades since disclosing the scam, which alleges that an employee provided fake guarantees worth $2 billion, Bloomberg reported.
Bhattacharya said on Wednesday this case was one of operational risk management failure, an area that she believes needs a lot of attention. She added that the banking system will suffer if proper governance is not implemented.
“I think what needs to be done is not the privatisation bit. I think banks are hurting on two fronts; one is getting a good, proper board in, and empowering the board,” she said.
The former chairperson also called for “the right kind of people” on the boards of bank, saying that she doesn’t believe Indian banks have that at the moment.
Asked about consolidation in the industry, she said it “needs to be considered down the line.”