As 2024 draws to a close, Uday Kotak, founder and director of Kotak Bank, shared his vision for India’s priorities in 2025. In his year-end musings, Kotak laid out a roadmap focusing on economic growth, global competitiveness, and sustainability to propel the nation forward.
Kotak focused on the need for sustained economic growth, urging the country to focus on fostering enterprise and encouraging “animal spirits” in business. “Go for growth. Let’s get enterprise and animal spirits firing,” he wrote in his tweet. He also introduced the concept of ROTI — Return on Time Invested — advocating for relentless productivity in the workforce.
Related Articles
My year end musings: India at 77.
1. Go for growth. Let’s get enterprise and animal spirits firing.
2. ROTI is Return on time invested. Go relentlessly for productivity.
3. Shun protectionism. It may benefit in the short term. Long term it makes us uncompetitive.
4. We need a…— Uday Kotak (@udaykotak) December 29, 2024
In terms of global trade, Kotak stressed the importance of avoiding protectionism, which may offer short-term benefits but could ultimately undermine India’s long-term competitiveness. “Shun protectionism. It may benefit in the short term. Long term it makes us uncompetitive,” the top banker stated.
Kotak also called for a structured plan to reduce the current account deficit over a reasonable period. “We need a plan to eliminate the current account deficit in reasonable time.”
Defence investment was another priority Kotak outlined, stressing that power and safety are crucial prerequisites for prosperity. “Increase investment in defence. Power is power. Safety is prerequisite for prosperity,” he said. The banker also advocated for continued fiscal consolidation, noting that it should remain a gradual process to ensure economic stability.
Kotak cautioned against excessive regulation and micro-management, which he warned could impede growth. He argued that while safety measures are important, an overly strict “zero accident” policy could pose high risks to development.
On markets, Kotak urged respect for free and fair systems, calling for intervention only in cases of market manipulation or bubbles. He also highlighted India’s demographic advantage, with its population of 1.4 billion people, advocating for a diverse and inclusive approach to growth.
Lastly, Kotak stressed the urgency of addressing India’s air pollution crisis, calling for tangible actions to tackle the issue and improve environmental conditions in cities that rank among the most polluted globally.
Kotak’s observations come as India’s economic growth slowed to a near two-year low of 5.4% in the July-September quarter of the current fiscal. The deceleration was attributed to poor performance in manufacturing and mining sectors, alongside weakened consumer spending. Despite this, India remained the fastest-growing large economy, with China’s GDP growth in the same period at 4.6%.
In the second quarter, private final consumption expenditure (PFCE) — a key indicator of consumer spending—grew by 6%, down from 7.4% in the preceding quarter. Gross Value Added (GVA) growth in the manufacturing sector fell to 2.2%, significantly lower than the 14.3% expansion recorded a year ago. Similarly, the mining and quarrying sector contracted by 0.01%, compared to 11.1% growth in the same period last year.
However, there were some bright spots. Agriculture and allied sectors saw GVA growth accelerate to 3.5%, compared to 1.7% a year ago, while the financial, real estate, and professional services sector grew by 6.7%, up from 6.2% in the corresponding period last year. Construction also performed well, offering a degree of optimism amidst the broader slowdown.
Chief Economic Advisor V. Anantha Nageswaran acknowledged the “disappointing” GDP growth figures but noted the resilience of agriculture and construction as key positives. Meanwhile, Aditi Nayar, Chief Economist at ICRA Ltd, highlighted the weaker-than-expected performance in manufacturing, mining, and services sectors as key contributors to the lower GDP growth rate.