Finance Minister Nirmala Sitharaman has done a "remarkable balancing act" on the fiscal deficit in the interim budget 2024, veteran banker KV Kamath said on Friday.
The Union government has set a target of 5.1% of the gross domestic product for the fiscal deficit in the next financial year, down from the estimated 5.8% in the current fiscal.
"It's a remarkable tightening of the deficit and I think the government will deliver on this," the chairperson of National Bank for Financing Infrastructure and Development, told NDTV Profit.
Kamath said an allocation of Rs 11.1 lakh crore for capital expenditure in the next fiscal is good, expecting the private investment to kick off. "They (private companies) have created a perpetual investment cycle engine," he said. "They can fund for a long time without budgetary support."
KV Kamath (Source: Vijay Sartape/NDTV Profit)
KV Kamath (Source: Vijay Sartape/NDTV Profit)
The digitisation underway in India will give more momentum to the current annual rate of 7%, leading up to the goal of the country being a developed nation by 2047, according to Kamath, who is also the chairperson of Jio Financial Services Ltd.
Kamath expects private banks to reduce their cost of operations through the use of technology to improve efficiency.
"The key growth area would be retail. I can sell the customer better products and provide working capital needs for corporates," he said.
The mix of income will change for banks and not necessarily be driven by the net interest margin alone, according to Kamath.
The veteran banker highlighted the higher participation of middle-income savers in mutual funds and systematic investment plans. He said people would continue to have faith in bank deposits while they looked for higher-return-generating investments.
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