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Planning Commission Deputy Chairman Montek Singh Ahluwalia on Wednesday got some unexpected support from President APJ Abdul Kalam, who favoured using part of the country's foreign exchange reserves for investment in high-yield enterprises.
"As you are aware, we have a growing foreign exchange reserve of about $120 billion. Bankers can have a mission: how to invest and multiply a portion of foreign exchange reserves, if it is made available for investing in relatively higher yield enterprises," Kalam said during his inaugural address at the Bankers' Conference, 2004.
In recent weeks, Ahluwalia had repeatedly suggested using foreign exchange reserves for infrastructure financing.
He also said banks should focus on development as the days of development financial institutions seemed to be over.
"The current fashion is the universal bank. Even the redoubtable IDBI has converted itself into a universal bank, shedding the robe of a pure development financial institution. The development finance responsibility, with its inherent risks, is squarely and fully on the banking sector," Kalam said.
The President said the fundamentals of the Indian economy were strong. "In India's entire history, very rarely have we come across a situation, all at a time, an ascending economic trajectory, continuously rising foreign exchange reserves, global recognition of technological competence, energy of 540 million youth, umbilical connectivities of 20 million people of Indian origin in various parts of the planet, and the interest shown by many developed countries to invest in our engineers and scientists including setting up of new R&D centres," he said.
The President also laid down a six-point programme to enable India to grow 7-8 per cent. He said banks should more than double credit to the agricultural sector over the next three years to Rs 200,000 crore (Rs 2000 billion) from Rs 90,000 crore (Rs 900 billion) at present.
Kalam also recommended allocation of at least Rs 10,000 crore (R 100 billin) from the next financial year for providing venture capital in the information-communication-entertainment sector.
He also proposed concessional funds for creation of corporate hospitals to provide networked healthcare in rural areas through medical insurance on the Yeshaswini model followed in Karnataka and also attract medical tourists.
Kalam said banks should participate more aggressively in infrastructure development and also help in providing 100 million dwelling units in villages in partnership with the states.
The President also advised banks to assist five rural development projects that generated at lease 10 million employment. He said banks should also ensure that they comply with the guidelines on education loans and students were able to pursue higher education.
He said the challenge before bankers was to raise the economic status of 260 million Indians living below the poverty line.
"Our mission is: Transforming India into a prosperous, happy, peaceful and safe nation, as our youth dream to have," he added.
He said the banking industry should service the micro-economic needs of the agriculture, manufacturing and services sectors. "To achieve the vision of a developed India, we have to simultaneously progress five areas where India has core competence for integrated action," he said.
He listed out agriculture and food processing, education and healthcare, ICE, infrastructure, including power, river linking, Providing Urban amenities in Rural Areas and self-reliance in critical technologies as focus areas.
"These five areas are closely interrelated and if progressed in a mission mode will lead to food security, economic prosperity, social welfare and national security," Kalam said.