Urjit R Patel: Encouraging young enterprising skills in India
Speech by Dr Urjit R Patel, Deputy Governor of the Reserve Bank of India, at the Business
Standard Best B-School Project Awards, Welingkar Institute of Management Development
and Research, Mumbai, 12 January 2015.
* * *
I am honoured to be part of the Business Standard Best B-School Project Awards to be
presented today for recognising the bright young talent of business schools in India. I
understand that this is the 7th edition of the Award, and 158 colleges have participated from
across the country with a wide range of projects. This conveys the high esteem that the
award is held in, its popularity among B-School graduates, and the impact it has made over
the years in recognising and honouring young professional talent. The teams are evaluated
on the basis of the rigour of their work, innovative approaches, structure of the content and
the meaningful solutions they provide for diverse business, social and organisational
challenges.
The function symbolises "out of box" thinking and the entailed enterprising skills of the
"Young India". It epitomises a tribe of budding professionals who are not risk-averse and
have "fire in the belly" to take a leapfrog into the future.
Frankly, I am deeply envious of the young students that I see in front of me. They have the
dreams, desire and the capability to create new business models and modern enterprises,
which India critically needs at this juncture. There are several notable inter-locking drivers
that have been recently initiated or reinforced with vigour, which will complement our budding
graduates' innate talent.
• An emphasis on entrepreneurship for solutions. To absorb a labour force that
increases by about one million per month requires many more entrepreneurs, tens
of thousands, if not hundreds of thousands, more.
• The national objective to make India a global manufacturing hub and a substantive
part of international supply chains. The "Make in India" vision/strategy is apposite
and provides a much needed "focal point" to inculcate durable competitiveness in
key sectors of our economy.
• The stress on improving India's ranking in the "Ease of Doing Business index". This
provides a measurable gauge to determine how we progress. The repeated
commitment and associated ground-level changes already taking place towards
deepening "Policy-driven" governance (and less government) is mission critical in
this context.
• Uncertainty has been lifted in key sectors like coal and spectrum.
• In today's world, terms like "game-changer" and "transformative" are often used
loosely, and are, therefore, more ubiquitous than warranted. But the "Jan Dhan
Yojana" scheme implemented almost wholly by our public sector banks, whereby
100 million bank accounts have been opened for those who were unbanked, is
unequivocally a "game-changer". It provides an unprecedented scaffolding and a
spring board for meaningful financial inclusion and, concomitantly, substantial
financial deepening of our economy.
• At the recent "Gyan Sangam" gathering of bankers and top-level policy makers in
Pune, important and far reaching changes were discussed. I am virtually quoting
from the official website two of these in the interest of brevity:
- We should redefine the metric for effective lending, viz., prioritise loans
to enterprises which will generate more employment.
- A call for an end to lazy banking; banks are asked to take on a proactive
role in helping the common man.
In other words, bankable labour-intensive enterprises should benefit as we go forward in this
direction.
There are 3 potential corollaries:
(i) First, a much larger number of small business loans will be encouraged rather than
an overriding emphasis on very large loans per se.
(ii) Second, in the context of discussions on priority sector policy/guidelines, finance for
small entrepreneurs, SMEs and employment creation may be reinforced. (RBI's
licensing policy for small finance banks has stipulated higher exposure to priority
sectors.)
(iii) Third, banks may have to revisit at an opportune time (not now) in due course (that
is, in the future) the individual company/group credit exposure limits, as well as
sector exposures as part of their learning for the future for better risk management
practices over the business cycle.
• Lastly, the hard earned macroeconomic stability provides an important backdrop for
optimal decisions by all stakeholders. We have to preserve this. The dramatic fall in
oil prices is a boon for us. It saves, on an annualised basis, around US$ 50 billion,
roughly, one-third of our annual gross POL imports of about US$ 160 billion. This is
on a back-of-the-envelope, top-line basis. Of course, there will be leakages and
other set-offs. But our external situation undoubtedly improves. The welcome
development enhances our disposable income (which will increase consumer
demand for other goods and services), reduce input cost of our businesses (which
will increase margins and help to enthuse investment demand), and aid government
finances by reducing the energy subsidy burden in the budget.
Let me conclude by quoting a participant at the inaugural session of this year's Vibrant
Gujarat Global Summit: "India will be a bright spot in an otherwise mediocre global economic
outlook".
Thank you, once again, for giving me the opportunity to speak at the 7th Business Standard
Best B-School Project Awards function.