To deal with India would be good business

Pawan Kumar Bansal, Indian Union Minister of State for Finance talks exclusively to Rohit Revo during his visit to Sydney.

What is the feedback you are getting about India’s booming economy when you travel outside India?

People outside India are attracted to India and they want to have good economic relations with India and want to participate in the growth of Indian economy. They now rank India very high as well.

I had an opportunity to talk at AIBC, IAG (Insurance Australia group) and also with other investors. This has provided me a good opportunity to understand the perception of Australian investors who are looking at India or have their presence in India and they are looking closely at our relationship with India with a lot of hope.

How would you convince skeptics that the boom in Indian economy is real and there is no bubble there, especially in the real estate sector?

You have to view this holistically. We are seeing over the period particularly over the last 3 years, average GDP has been 8.6%. This by all accounts is a very good figure and new investment that is taking place in infrastructure, airports, etc. Express ways to the tune of 475 billion USD over the next 5 years are to be built. When it comes to real estate sector, in the past we have seen more boom in the real estate and now banks have been asked to slightly revalue their portfolios because there may be speculation and we don’t want any speculative activity. But the real growth in the real economy is there and you need to make the distinction between the two. When it comes to housing loans in the real estate sector there has been some provisioning to see that rules are adhered to. We need to ensure there is no bubble or storm for that matter. Economy is doing well and RBI and govt will take a step to avoid a situation like this.

The recent events regarding 123 Agreement have signaled instability. Do you see a sign of nervousness among foreign investors in India?

Nobody really has said anything to me about this. They know that despite all the political differences that you can have time to time, differences do arise in a democracy, but we are going ahead. This is the essence of democracy. They look at the success story of the economy. Indian economy is booming with 9.4 % growth, the resurgent Industrial sector has a growth of 10.9% and dynamic services sector is growing at 11% with growth in agricultural sector as well. They know that to deal with India would be good business.

Are we heading for an early election in the next 6 months?

As I look at things I think elections will be held in time. Lok Sabha would last its full term.

Are you happy with the way Australian regulator has given access to Indian banks and insurance companies to operate here? There have been concerns that they are very slow?

Mr Khandelwal, the Chairman of BOB told me that they did not encounter any difficulty or complication in pursuing the application for his bank while opening the representative office. Chairman of APRA has suggested there would be no complications. I hope the process would be expedited in future. The other bank SBI took some time to attain the present status, though. We hope things would be expedited in future.

SBI and BOB don’t have a retail presence yet here….

It’s a step in the right direction to grant licenses to other banks. Regulators may be slow and have to look at all aspects and you don’t find fault with it. Slowly and steadily as economy expands banks from both sides will expand into the respective countries on a reciprocal basis. In the days to come there will be a further two way traffic in the growth of banks in the face of integrating world economy. I was told in Ireland insurance companies are proving a product for health where they will take you to India for medical procedures in case there is a big wait for the customers. People are willingly going for that. Why would such companies not like to deal directly with India. Innovation is taking place and banking is not confined to taking deposits and giving loans. Banking today means much more than this. Insurance is just an example and synergises the efforts in these directions.

Will the Indian government be encouraging Australian banks to have a retail presence in India?

There are some banks who have applied and there are 3 applications pending with the Reserve Bank of India (RBI). RBI is the regulator and they decide taking all matters into account. However there is no entry bar. Presently there are 20 foreign banks in India with 270 branches. And there are 19 Indian banks that have presence outside with 188 branches. BOB has presence in 22 countries with 54 offices and slowly it is moving up.

Are you happy with the remittances NRIs are sending back to the country?

They are sending money we have welcomed it also. There is good money of inflow with 230 billion dollars foreign exchange reserves. The NRIs are an Indian component and have traveled from India to many countries worked hard and earned a place for themselves. We welcome their participation and need them. They are partners in progress of India. We want them to play a more active role in the Indian economy.

Do you think opening of branches by Indian banks abroad will help boost these ties?

That would be always there as one part of the work these banks would do. The NRI’s are India’s ambassadors abroad and are part of the country where they live. They will surely make use of these new offices to target investment in India.

Australian Indians have not seen the visit of an Indian PM in the last 15 years and are disappointed. Would you convey this to the PM?

I will convey this to him. His hands are full with the work for country as well as internationally but we value our friendship with Australia and when the Australian PM was in India both met and agreed that the relationships had to go beyond the 3 C’s of Cricket, Curry and Commerce. Sometimes such visits do take time but a good number of ministers have been coming to Australia and the PM clears their visits.

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