The demographic change India is going through, coupled with the banking infrastructure being put in place, stands to greatly increase savings in the country, Chief Economic Adviser Krishnamurthy Subramanian said on Tuesday.
Mr. Subramanian also said India needs to move out of the mindset of being apologetic for profit, as long as they are legally obtained.
“The demographic change India is going through is very important for savings growth,” Mr. Subramanian said, while speaking at a book release. “As life expectancy increases, people realise that they must begin saving by at least 40 years because they will live for much longer now.
“And, as people have fewer children, they will realise they need to save because their children might not be able to take care of them,” Mr. Subramanian added. This shift will be enabled by the Jan Dhan Yojana, which is creating the necessary banking infrastructure, especially in rural India.
The CEA also spoke about the importance of digitisation in the banking space and how it stands to greatly increase the reach of savings and credit instruments. However, he added that this digitisation needs to be accompanied by greater digital literacy.
“I don’t know why people are apologetic about profits,” Mr. Subramanian said. “If you are working within the law and are helping the economy grow, then profits are good!”
Also speaking at the event, HDFC Bank MD Aditya Puri said that banks, in fact, were the safest when it came to data security.
“The only place data is really secure in India is the banks because of the banking secrecy legislation,” Mr. Puri said. “As and when the privacy law comes, then others will be the same, but for now only the data in banks is secure in that way.”
