The Indian economic growth will be challenged by huge emerging global crisis including possible debt default by many small countries leading to currency crisis and developing countries’ ability to fund their ESG targets.

Amitabh Kant, G20 Sherpa said amid the looming global crisis, India has a great narrative to make in terms of its success in technology innovation for an inclusive growth as a solution for the crisis.

Looming debt

Some of the countries have already started defaulting and they are negotiating with International Monetary Fund and World Bank for a bailout. This has led to a currency crisis and will pose a challenge for India, he said at the 9 th annual SBI Banking and Economics Conclave on Wednesday.

Moreover, China has lent to many countries in opaque and non-transparent manner so much so that it did not want even the Parliament of the borrowing country to know about the obligations on these loans, said Kant.

When G-20 wanted to discuss the looming debt in countries, China resisted and insisted that it will negotiate with the borrowing countries separately, he said.

The debt default by some of these countries will lead to collapse of their currency and will have a cascading impact on the world economy, he added.

Silver lining

Amid the crisis, India has a great opportunity to attract investments in the manufacturing sector, if it promotes ease of doing business by reducing the number of permissions needed to put up a business.

Throwing up statistics, Kant said about 85-90 per cent of the world supply chain is dependent on Taiwan for electronic chips, solar panels and high-end electronics inputs. What will happen if China decides to invade Taiwan? he questioned.

“I strongly believe that India will never be able to grow at a rapid rate till it gets into new (sunrise) growth areas. It is important to understand that last year, the total sale value of mobile and electronics were more than the total value of automobiles,” said Kant.

Areas of growth

The world is growing in another direction in value terms. So, India must grow in the areas of mobile and electronic manufacturing, solar energy, electric mobility, advanced chemistry (cell battery) and green hydrogen.

“If we are not able to do this, we cannot grow at 9-10 per cent. We can never grow at even 7 per cent. We need to get into areas of growth where the world is seeing disruption in terms of technology. Therefore, the PLI scheme is designed towards this end,” he said.

Banks must do a lot of hand-holding in these areas to ensure that India transits into these areas, he added.

Regulators such as RBI, Sebi, IRDA and Competition Commission of India should act as development and change agents as growth in any sector cannot come without being facilitated by the regulator, he said.

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