ET Now caught up with KV Kamath , Chairman, ICICI Bank , for his views on a number of issues, including economic growth and its impact on job prospects in the country, equity markets, and giving foreign banks greater access into the country, among others. Excerpts:
Now as the growth is firmly back on track and you constantly engage with regulators, investors, other banks and corporates, what is the sense you get? Would you say that we are finally at a stage where we can prepare ourselves or rather confidently say that we are on the verge of double digit growth?
I think we clearly are on the verge of a double digit growth. There is a huge level of optimism around business in many sectors. Whether it is manufacturing, infrastructure or any other sector, there is a huge level of optimism.
On the one hand you have the economy at present going at a little over 8% and on the other hand you have the jobs market growing at just about 4%. Would you worry that somewhere the corporate sector or rather industry at large is going to face human resources crunch and again what do you believe the impact of this on the corporate sector?
My view is that we are probably growing well over 10% at this point of time. If we add what I call the uncounted and the unaccounted growth to the base figure, the base figure of 9% and you add whatever number you want 2% each for uncounted and 2 for unaccounted, you are well into double digits. But I do not want to debate the point. Clearly this sort of growth will need a huge amount of human resource in business and that to run this economy at this pace. Luckily for us where we are in terms of young people coming into the job market, we will have anything between 10 and 15 million youngsters ready to come into the marketplace and I think that is the potential that we need to see and absorptive capacity for the economy growing at double digits. I think clearly there is the ability to produce that many young talented people for industry, and on the part of the industry to actually have them come in and do what they are supposed to do.
But at the same time over the last 6 years if you just look at the average wages of the Indian worker, they have gone up by roughly 100 to 150%. So obviously there is some sort of a resource crunch. It is pointing to some sort of a pressure on the books of organisations in terms of their wage costs?
Two things are happening. You called it absolutely right. The wage increase that is happening is I think because of a mismatch of skill sets. There is a large workforce ready there, but the skill sets that a particular business requires is or could be in short supply and that is why you are waging less. Secondly, I think it is also a resetting of the base level itself in terms of wages or compensation in a rapidly-expanding country. The challenge then is really to prepare people with the right skill sets and that I think is the next thing that will be addressed by both government and industry.
Now as the growth is firmly back on track and you constantly engage with regulators, investors, other banks and corporates, what is the sense you get? Would you say that we are finally at a stage where we can prepare ourselves or rather confidently say that we are on the verge of double digit growth?
I think we clearly are on the verge of a double digit growth. There is a huge level of optimism around business in many sectors. Whether it is manufacturing, infrastructure or any other sector, there is a huge level of optimism.
On the one hand you have the economy at present going at a little over 8% and on the other hand you have the jobs market growing at just about 4%. Would you worry that somewhere the corporate sector or rather industry at large is going to face human resources crunch and again what do you believe the impact of this on the corporate sector?
My view is that we are probably growing well over 10% at this point of time. If we add what I call the uncounted and the unaccounted growth to the base figure, the base figure of 9% and you add whatever number you want 2% each for uncounted and 2 for unaccounted, you are well into double digits. But I do not want to debate the point. Clearly this sort of growth will need a huge amount of human resource in business and that to run this economy at this pace. Luckily for us where we are in terms of young people coming into the job market, we will have anything between 10 and 15 million youngsters ready to come into the marketplace and I think that is the potential that we need to see and absorptive capacity for the economy growing at double digits. I think clearly there is the ability to produce that many young talented people for industry, and on the part of the industry to actually have them come in and do what they are supposed to do.
But at the same time over the last 6 years if you just look at the average wages of the Indian worker, they have gone up by roughly 100 to 150%. So obviously there is some sort of a resource crunch. It is pointing to some sort of a pressure on the books of organisations in terms of their wage costs?
Two things are happening. You called it absolutely right. The wage increase that is happening is I think because of a mismatch of skill sets. There is a large workforce ready there, but the skill sets that a particular business requires is or could be in short supply and that is why you are waging less. Secondly, I think it is also a resetting of the base level itself in terms of wages or compensation in a rapidly-expanding country. The challenge then is really to prepare people with the right skill sets and that I think is the next thing that will be addressed by both government and industry.
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