Need to correct compliance burdens for businesses: Kamath

PTI, May 26, 2023, 7:03 PM IST

Image credit: Wikimedia Commons

Mumbai: Veteran banker K V Kamath on Friday said there is a need to correct ”compliance burdens” for businesses in the country and also reduce litigations.

Kamath, who now chairs the government-promoted National Bank for Financing Infrastructure and Development (NaBFID), said that the government needs to reduce the litigation and concerns on tax laws at a greater speed.

”…the level of compliances and compliance burden that needs to be corrected,” he said addressing an event organised by industry body FICCI here.

He later elaborated that the government itself has identified issues on the compliances front when it spoke about simplification of various procedures for businesses.

When asked if it is impacting investor confidence, Kamath replied in negative, reasoning that the investor class will come wherever it sees value.

Kamath said the foreign direct investment (FDI) flows have been impacted by the overall global sentiment where volatilities are leading to a deferment of decisions, and also the funding winter in the private equity and venture capital space.

Private capital expenditure will start picking up once the corporate capacity utilisation crosses the threshold of 85 per cent, Kamath said.

Kamath said industry captains are deferring their investment decisions till they see demand for their goods. However, he said that demand is not sluggish.

He said sectors like steel and cement, which constitute the primary building blocks, will run out of capacity first and start investing.

Kamath said he does not want to ascribe an alphabet to the recovery, as being V-shaped or K-shaped which illustrates inequities, but exuded confidence that India will experience long-term growth.

He said every city is being rebuilt or will have to be rebuilt, which makes urban rejuvenation on the infrastructure front as a key driver of economic growth.

While infrastructure will have a linear way of growth in the long term, there will be episodic growth in other sectors, Kamath said.

The digital economy’s share in the GDP will surely increase to over 20 per cent in the long term from the present levels of 6-7 per cent, making it a key driver of growth, he said.

Advent of artificial intelligence and generative AI will not lead to any re-tooling in the white-collar jobs, Kamath said, declining to speculate about its impact on blue collar jobs.

He said the environment, social and governance (ESG) theme will not extract a cost on businesses, but will be beneficial from a long-term perspective.