The country's economy is set for a stronger performance going forward, driven by growth in large corporates, agriculture and most importantly digital startup sector, veteran banker KV Kamath on Thursday said.
The economy began to rebound in the third quarter of the last fiscal and the momentum has continued despite a slight slowdown due to the impact of the second wave of the COVID-19 pandemic, witnessed earlier this year, he added.
The country's economy grew by a record 20.1 per cent in the April-June quarter.
I would think that we are set for probably even stronger performance going forward, Kamath said.
There are sectors such as large corporates, who have deleveraged themselves, technology and agriculture are driving the growth, he noted.
And more importantly, momentum has come and will continue to come from a sector which is not talked of much, which is what I call the new digital startup sector, the former head of ICICI Bank and New Development Bank said.
There are many companies in the new digital sector coming up at a very rapid rate in areas such as financial services, e-commerce, food and transportation, he noted.
According to Kamath, in some of the other growth economies, the contribution of the digital startup sector is around 40 per cent of the economy, whereas in India it is still a very small percentage.
I would think that's (digital startup sector) is going to be one of the fastest-growing areas of India with a potential to probably be 20 to 25 per cent of the economy in the next two years, in what I call the digital supercycle, he said.
The services sector, which is customer interfacing, is still struggling despite the ease in restriction on movements, he added.
However, Kamath expects an improvement in the services sector in the October-December quarter.
Speaking on the financial services sector, he said the steps taken in the last three years have ensured that the banking sector's balance sheets have become clean.
He said setting up a bad bank is a great step, which will further help in cleaning up banks' balance sheets.
Kamath advised the financial sector, including the banking sector, to closely look at the opportunities and threats of digitisation.
Overall, in a growing economy, the financial service sector will have a very strong future with a strong digital bias, he noted.
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