Uday Kotak, Managing Director and Executive Vice Chairman of Kotak Mahindra Bank, is among the most credible voices of Indian industry. An ardent nationalist, Kotak has been a constructive critic of Modi government in the last few years. And therefore, his advice and suggestions are taken seriously among the wider public, the policymakers in the finance ministry, and among the international community.
In his latest advice to finance minister, Uday Kotak said that India needs to attract most risk capital by building trust among lenders, savers and investors. Trust was among keywords in the Economic Survey, 2020, and Kotak is also banking on the same, to achieve 7-8 per cent combined annual growth rate, required to make India 5 trillion dollar economy by 2025, as promised by PM Modi.
“If we aspire for 7 per cent or 8 per cent or 9 per cent growth, changing the mindset on risk capital and building that trust bridge is core to our future,” said Kotak at Confederation of Indian Industry (CII)’s 13th corporate governance summit.
“The most important aspect of corporate governance we need to focus on is building trust in the mind of any lender, saver, investor that his or her money is safe, and will produce returns which are justifiable and not be taken away by poor governance at the company level,” added the veteran banker.
The Economic Survey this year also emphasized on wealth creation led by the free-market economy and supported by invisible hand of trust. The very first chapter of the survey was titled- Wealth Creation: The Invisible Hand Supported by the Hand of Trust, and argued, “During much of India’s economic dominance, the economy relied on the invisible hand of the market for wealth creation with the support of the hand of trust.”
The Survey argued in favour of using “trust as a public good that gets enhanced with greater use” and outlined the summary of the survey as- “The Survey posits that India’s aspiration to become a $5 trillion economy depends critically on strengthening the invisible hand of markets together with the hand of trust that can support markets.”
A few months ago, Uday Kotak explained the reason behind the ongoing economic slowdown and its nature in an interview with the Economic Times. According to him, Indian businesses are undergoing the cleansing and purging process, and this is the reason behind the ongoing slowdown.
On the questions of are we going through a cyclical slowdown or a structural slowdown, Kotak replied, “We got to be clear. We are going through a cleansing and a purging process. Business in India happened in a particular manner for a long time and the rules of the game were different. The rules of the game have changed. Business, in general, has taken a little longer time to recognise the new rules of the game and it is moving towards the survival of the fittest.”
Uday Kotak has got the diagnosis of India’s economic slowdown right and he has suggested the right remedy to achieve the Prime Minister’s vision of a five trillion dollar economy by 2025. The bureaucrats in the finance ministry and the business leaders of the country must read Kotak’s explanation for economic slowdown and work on the remedies suggested by him. The primary reason behind investment slowdown in the last decade was the crisis in the banking sector of the country, and therefore, no one can assess the situation better than the veteran banker himself.