Chief Economic Advisor K V Subramanian Tuesday said there is a need to tap foreign capital to accelerate growth from the current level of 7 per cent to 8 per cent.
"Apart from sovereign bond issue, we also need to be tapping into foreign capital to trigger the virtuous cycle. Once this virtuous cycle is triggered then other parts start moving," he said at the book launch of HDFC Bank 2.0-From Dawn to Digital.
Achieving USD 5-trillion economy by 2024-25 is possible although the goal is slightly stretched, he said.
"When we get investment that enhances productivity, exports, jobs which leads to demand and thereby again creates investment triggering that is actually important. Of course, we are growing to close to 7 per cent. In order to grow at 8 per cent, we do need to trigger this and, therefore, foreign capital is something that has to be encouraged," he said.
Indian economy reached to the level of USD 1 trillion in 55 years and added USD 1 million in the past 5 years to USD 2.75 trillion by March 2019, he said.
On the merger in the public sector banks, Subramanian said they are being done based on synergies, and policy is to exploit economies of scale.
"Rather than any top-down strategy or mandate which says we need to have four banks, this should be based on looking at banks that might combine well because of synergies," he said.
