Mr. V Vaidyanathan, MD & CEO, IDFC FIRST Bank, addressed the India Economic Conclave on the theme ‘India's $5 Trillion economy vision - Aspiration to Action’.
Excerpts from his address: “The key point to note is that GDP can be taxed and consequently such tax can be used to create public good, and make more investments for growth. So more the GDP, more the tax and more the public good and more investments for future, better defence systems, better roads and so on."
“In 1980, China’s total GDP and per capita GDP was equal to India. In 40 years, China is 5 times GDP of India. We have lagged in the past 40 years in not growing our economy at their pace, despite same starting point. So China’s tax collections is $2.7 trillion, 5 times our tax collection of $480 bn (all state, center and other taxes). So their ability to pull poor out of poverty by social schemes is 5 times better. We are already behind, we need serious catching up to do for the sake of our security and quality of peoples’ lives. GDP has a direct role in poverty alleviation. It’s that simple"
“Reforms are critical. But there will always be a J Curve in the impact of reforms - meaning first there will be pain of reforms, then there will be huge benefits.” He recollected the mythological story the legendary Chairman of ICICI Mr. Vaghul told him which illustrates the “first pain, then gain” theme of reforms.
“What we need to strive for is an inclusive $5 trillion economy. Government has done large reforms like GST, daily alignment of fuel prices with international markers, IBC etc. and micro-level-impact reforms like high LPG penetration, DBT, Jandhan, 100% electrification. These create the pipes and arteries for reaching the $5 trillion economy to the bottom of the pyramid. We need faster reforms, both macro and micro. We need them urgently, we are behind China, we should not forget."
"Closing quote 'The tragedy in life is not in not achieving a goal, the tragedy is in not having a goal.' So it's great that we have a Goal of $5 trillion economy with a deadline-2024."
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