The Hindu : Tamil Nadu / Chennai News : Rising inflation won't hit growth: Kamath

Online edition of India's National Newspaper
Sunday, Feb 18, 2007
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Tamil Nadu

Tamil Nadu - Chennai

Rising inflation won't hit growth: Kamath

Staff Reporter

Says some slowdown is required

BEST PERFORMERS: K.V. Kamath, MD and CEO, ICICI Bank (second from left) and C.K Ranganathan, president, Madras Management Association, congratulating the team from the NTPC, Vindhyachal, which won the 11th MMA Competition for Tomorrow's Managers, at the MMA Annual Convention in Chennai on Saturday. — Photo: BIJOY GHOSH

CHENNAI: ICICI Bank Managing Director and Chief Executive K.V. Kamath played down fears that the rising inflation would derail India's growth.

"There will always be corrections... corrections are part of the growth cycle. Some slowdown is required, and it will happen. But growth will pick up again," he told the annual convention of the Madras Management Association on Saturday.

"Ten per cent [GDP] growth on a sustainable basis is practicable... it is on a sound footing," he said.

Pointing to the experience of China, which survived an overheated economy and inflation surging as high as 25 per cent at stages of its growth trajectory, Mr. Kamath said it was India's turn "to see sustained double digit growth for the next 15-20 years."

Way forward

Encouraging Indian firms to take the knowledge they have gained in scripting the Indian growth story to the global stage, he said: "Indian industry has the capability to disrupt business worldwide. This is the way forward... This disruption — and I mean that in a positive way — is clearly coming from brainpower."

In telecom, steel, power and financial services, Indian companies are "rewriting the rulebook" by offering products at a fraction of the price offered by the rest of the world. They are now ready to "disrupt incumbents across the world with strategies proved in India."

"Focus on rural India"

As for the farm sector that lags manufacturing and services in growth, Mr. Kamath said the solution was to focus on rural India as a whole rather than the single aspect of agriculture. Growth in rural India would be resolved through the use of partnerships and technology, he said, naming manufacturing, distribution, retail and financial services as key partners.

Smart card-based campaign

So far as banking was concerned, ICICI Bank's strategy in rural India was to "start with lending, not open shop to take in deposits," he said.

The bank planned to roll out a smart card-based campaign, "using technology that leapfrogs" anything available right now, "disrupting" the existing ATM chain. While this technology would ultimately be used in urban centres as well, the villages would get it first.

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