India needs external capital flow to grow at nine per cent: SBI Official

We are looking at 7% growth for the current financial year for the Indian economy. We are expecting inflation to be very benign. Our estimate is there is every possibility it will touch USD five trillion in the next five years, says C Venkat Nageswar.

Beijing: India's economy needs external capital flow to grow at nine percent and touch USD five trillion in the next five years, C Venkat Nageswar, Deputy Managing Director, International Banking Group of the SBI said on Monday.

Nageswar is currently visiting China to interact with various Chinese regulators and officials of Asian Infrastructure Investment Bank, the New Development Bank of the BRICS countries to discuss cooperation with the State Bank of India.

C Venkat Nageswar, Deputy Managing Director, International Banking Group of the SBI

"We are looking at seven percent growth for the current financial year for the Indian economy. We are expecting inflation to be very benign. Our estimate is there is every possibility it will touch USD five trillion in the next five years," Nageswar told the media here.

"It is doable. We need to grow at nine percent to achieve those numbers. It is possible and we are confident," he said.

"But in order to grow at nine percent, India needs capital. If we are looking for five trillion-dollar growth in the next five years, there is going to be a deficit in the capital requirements. We need external capital to come," he said adding that recently the Reserve Bank of India has relaxed regulations for the banks to attract more capital.

He said there was a good amount of liquidity globally.

"Here is the only real economy giving good interests rates. Therefore, we are looking for liquidity to flow into India," he said.

Outlining the reasons for the slowdown in the economy, he said economies across the world have slowed down.

"We have crude prices which are extremely volatile, uncertainties in the world such as US-China trade war and Brexit," he said, adding that these uncertainties are impacting the Indian economy.

"One of the positive thing in India is the monsoon is good and we are expecting the rural economy to pick up and therefore slowly you will see economy coming back to normalcy," he said.

About concerns related to job growth, he said as per the study conducted by SBI chief economist, "there was a small disruption in the small and medium enterprises during post demonetization. But slowly the digitization is picking up in the country. The employment is limping back to normalcy."

Nageswar also met Indian Ambassador Vikram Misri here Monday and discussed the SBI's operations in China.

The SBI currently has branches in Shanghai and Tianjin cities with a total turnover of USD 700 million.

The Tianjin branch is being closed down as part of the attempts by the bank to consolidate its operations, Nageswar said.

The consolidation was aimed at increasing SBI's to market share and trade finance.

"For SBI China the basic business is India-China trade. Mostly our focus is on trade finance," he said, adding that his visit is aimed at how the bank will support trade transactions.

The bank hopes to cash on the growing India-China trade which last year totaled to over USD 95.5 billion amid expectations that it would cross USD 100 billion this year.