Role of finance indisputable in shaping India's growth story: RBI Deputy Governor Michael D Patra

New Delhi [India], September 3 : The role of finance in shaping and reshaping India's future is indisputable as there is a deep nexus between finance and growth, Michael D Patra, Deputy Governor, Reserve Bank of India (RBI), said.
This was stated by Patra, during a keynote address on "The Role of the External Sector in Financing India's Growth Aspirations" of the Financing 3.0 Summit organised by Confederation of Indian Industry (CII) in Mumbai on Tuesday.
The well-developed and robust finance sector would be pivotal for underwriting India's inclusive and sustainable future due to its pivotal role in facilitating capital accumulation, lowering transaction costs, and managing risks, among others, he said in his keynote address.
While India depends largely on domestic resources for its growth, external investments play an important supplementary role in driving economic growth and prosperity, Patra said.
During his address, Patra delved into India's remarkable growth story and the fact that India is riding on the cusp of a distinct demographic advantage.
He said that a productive workforce is critical for value creation in an economy while capital would play an important supportive role. And, in this context, India's rich human capital, rising STEM graduates, leadership in IT and communications, and startup ecosystem, provide the nation with an identified distinctness and primacy of place in the world.
And as India emerges as a manufacturing hub and there is a commensurate rise in employment, the country would witness a rise in per capita income and economic prosperity, he said.
Patra maintained that the role of finance in shaping and reshaping India's future is indisputable as there is a deep nexus between finance and growth.
In India, it is household savings that have largely financed the investment requirements of the economy and would continue to do so in the future.
The Deputy Governor proceeded with his address by illustrating the five specific sectors where finance would play a significant role in supporting India's ascent as a rising power. The first is for financing infrastructure and reducing the high infrastructure gap for which he sought private sector participation. Second is the MSME sector which continues to be underserved. He underscored the role of banks, fintech and NBFCs to cater to the needs of the sector.
Third is the need for finance for skilling, reskilling, and upskilling for which he emphasized on support from the private sector, issue of bonds, skill vouchers, venture capital, e-learning centres, start-ups among others.
Fourth is climate finance, which funds sustainability initiatives such as the Green Hydro mission and net zero goals. And lastly is the requirement for finance to facilitate India's digitization journey.
Deputy Governor Patra concluded by underpinning the role of the corporate bond market in deepening the sector and eluded that while external finance is crucial to accelerate India's growth momentum, its absorption would be contingent on reforms in the financial sector.