The Founder & Director of Kotak Mahindra Bank pointed out three distinct domains where India needs to ramp up efforts — military, finance and creativity. For a transformative change to happen, India would need to make itself more powerful, he said.
The need for India now should be to take a cue from the three powers, he added.
Referring to America’s huge power, Kotak explained how its strength in the three areas mentioned above will enable Trump to impose his will on the world.
First step for India
As a first step, India will need to transform its spending on defence as a percentage of GDP, Kotak said. India’s defence spending is not growing much, he pointed out, saying that even Israel is better than India on this front. To drive his point home, he cited the example of Europe, which he said is now worried because it has perennially underspent on defence.
“India needs to get disproportionately stronger in military power,” Kotak noted. The first step to a really transformative change is that India must see itself counted among the most powerful countries, he said. “We have no choice but to get dramatically more powerful,” Kotak observed.
Kotak’s money lesson for India
On the financial front, Kotak noted that having a reserve currency status could be a great enabler for transformative change.
India needs a very competitive trade account, he further said. At this point, there is a need to think about how to make more money than we spends, he added.
According to Kotak, India should aspire to become self-sufficient on the current account, and then aspire for a reserve currency.
A number of factors are already in India’s favour, Kotak said, citing examples of the FIIs’ continued confidence in India and the benign oil situation for the past several years.
It is because of its strength in the three areas mentioned above that the US commands respect from one and all despite running a huge CAD, Kotak said. According to Kotak, the world is finally respecting power — the kind of power that the US has.
A different world under Trump?
Speaking on cryptocurrencies, Kotak said he was not a big fan of crypto. With respect to crypto’s sharp rise post Trump’s election victory, Kotak said that something has to give at some point.
Whether or not one agrees with Donald Trump, one has to admit that he has changed the rules of the game, Kotak said.
He noted that the focus is now on how Trump is going to run the world. His policies would be inflationary, Kotak cautioned, adding that if US rates and bonds are high, it gives very little chance to other countries for a dramatically good performance.
Kotak also sounded a warning note on protectionism, saying that one can’t live off being protected forever.
Creativity in India’s case
Speaking on the last of the three transformative factors, Kotak said India needs to up its game when it comes to creativity. Calling India a “deep service” country, he observed that it would need creativity to turn itself into a product powerhouse.
Kotak also made mention of a significant upside for India in this regard: he said some of the value creation in India is real and sustainable, as seen in the success of things like quick commerce, which have failed in most other countries.
The market in general is expanding — more demand, more supply — that is the way to go if one wants transformational change, Kotak said, cautioning at the same time that there is also a need to be ready for a global shock.
The ROTI India needs
At the end of his remarks, Kotak made use of a curious acronym — something he said India needed most at this juncture.
In order to transform, the thing India requires most is ROTI — return on time invested, Kotak said. The country has to get serious about implementing projects on time; there is an urgent need to let go of the chalta hai way, he added.
The Viksit Bharat targets are almost upon us, so India must take wholeheartedly to this ROTI, Kotak concluded.