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Nilesh Shah, MD, Kotak Mahindra AMCOver the past decade, India has climbed from the 10th to the 4th largest economy globally, marking a significant milestone in its development journey. According to Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company, this dramatic rise is powered by a “Triveni Sangam” — the convergence of talent, capital, and infrastructure.
In an exclusive interaction with ETBFSI, Shah highlighted how the economic mindset in India has shifted. “In the 60s, 70s, and even 90s, young professionals aimed to move abroad after graduation. Today, more of them are staying back and launching entrepreneurial ventures in India,” he said.
Double-Digit Growth Must Be the Target
Despite India being the world’s fastest-growing major economy, Shah emphasized that the country should aim for double-digit GDP growth, rather than settling for high single digits.Looking ahead to the next 24–36 months, Shah identified four major factors that could sustain and boost domestic consumption: A ₹1 lakh crore income tax cut effective this year, Possible petrol and diesel price reductions, driven by falling global oil prices, Lower EMIs due to a recent half-percentage point drop in interest rates, The implementation of the 8th Pay Commission in 2027, expected to increase salaries for government employees.
ALSO WATCH: Nilesh Shah says India’s growth and consumption story is intact
“These combined will support both urban and rural demand,” Shah noted.
Private CapEx Still Lagging Behind
While consumption and public sector investments remain strong, private capital expenditure (CapEx) continues to lag. Shah attributed this to several factors: Uncertainties around succession planning in family businesses, Rapid technological disruption, Challenges in ease of doing business, and Market volatility and an ongoing $100+ billion trade deficit with China.“China uses strategies like Sam, Dham, Dand, Bhed to push exports — we need to rethink our approach,” he added.
Shifting Consumption Patterns
India’s consumption landscape is also undergoing a generational shift, Shah observed. “Older generations never imagined buying a mobile phone. Today, younger consumers expect the latest iPhone model every year,” he said.
He also pointed out that outbound spending is rising sharply, with over one million Indian students studying abroad and growing international travel. “This change is not fully captured in official consumption data,” Shah said.
Credit Growth Must Lead Economic Growth
In the financial services sector, Shah underscored that credit growth must outpace economic growth to ensure momentum. “India’s financial infrastructure is among the best globally. Our stock exchanges handle transaction volumes comparable to the Kumbh Mela,” he said.However, he cautioned that banking is inherently risky. “To earn ₹2, you have to risk ₹98. Lenders must prioritize the return of principal over return on principal,” Shah warned.
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Private Credit: A Growing Opportunity
Shah also highlighted the emerging role of private credit and alternative lending, especially for entrepreneurs unable to secure bank loans.
“Private credit exists because banks are restricted from certain lending activities. If that changes, the private credit market could diminish,” he explained.
Entrepreneurship and Wealth Creation
On wealth generation, Shah reaffirmed that early backing of entrepreneurs remains the most powerful engine of long-term returns. However, he advised that balanced asset allocation is essential for sustainable wealth creation.India’s economic ascent is undeniable, but challenges remain. Shah concluded by emphasizing the need for inclusive growth, a stronger push for private investment, and smart credit expansion to sustain momentum.
“India has the building blocks. Now, it’s about firing on all engines,” he said.
- Published On Jun 2, 2025 at 07:55 AM IST
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