India’s financial sector has seen a scorching pace of growth in the past 75 years. From banking being a luxury that a few thousand urbanites enjoyed in 1950s to today, when 80 percent of the population have bank accounts — with large part because of the Pradhan Mantri Jan Dhan Yojana.
Mutual funds too have grown from a few thousand accounts in 1990s to a mammoth 40 lakh crore. Likewise, insurance has grown at a hectic pace since the year 2000.
In an interview with CNBC-TV18, KV Kamath, chairman of the National Bank for Financing Infrastructure Development, or NaBFID, said India has moved from capital deficit to capital neutral to a capital-surplus country.
He said, “India from a capital deficit country has now come to a situation where it has cash flows sufficient to propel growth. It is like running an engine with its own momentum as it were in terms of overall economy. So India has moved from capital deficit to capital neutral to capital surplus and various players have been intermediaries in making this possible.”
He believes the private equity sector coming into newer types of businesses will be the next momentum providers for Indian economy.
“The momentum in economy is driven by its components which are underlying businesses. Likewise in terms of capital, companies through their free cash flow generation have got reserves or networth which allows them to grow further. You also have engine of private equity sector coming in and driving new businesses, newer types of businesses which I believe would be a huge momentum provider for Indian economy as we go forward," Kamath said.
Watch video for entire conversation.