India will need a total of Rs 1,094 lakh crore of funds to ensure an average growth of 8% to 9% by 2036 according to the government’s Viksit Bharat plan, SBI chairman CS Setty said. Out of this amount Rs 323 lakh crore has to come from banks while equity markets will have to generate Rs 643 lakh crore, Setty said adding that investors will have to move away from the derivatives markets to spot transactions for more depth and liquidity.

“For the first leg of Viksit Bharat that is up to 2036 we envisage a growth rate of at least 8% to 9% on an average. These rates can be achieved if we can increase the investment rate to 35% by 2036 (which is) approximately 200 basis points higher than the current levels of 2024. Thus, the domestic savings rates must rise from the present levels by at least 350 basis points to 33.5% so that CAD (current account deficit) stays at around 1.5% of GDP its long term sustainable level for India,” Setty said in his keynote address at the an event organised by the Securities and Exchange Board of India (SEBI) and National Institute of Securities Markets (NISM). One basis points is 0.01 percentage points.

The government aims to become a $30 trillion economy with a per capita income of $18,000 per annum by 2047, the country’s centenary of independence and avoid the middle-income trap achieving a sustained growth rate of between 7-10% over the next 20-30 years, which will catapult the economy to a developed nation.

But to achieve the target India must grow its GDP nine times from the current $3.36 trillion and increase its per capita income eight times from $2,392 per annum currently. World Bank categorises high-income countries with a per capita pf a minimum of $14,005.

Setty said back of the envelope level calculations shows that capital markets must gear for additional supply of savings to the tune of 3.5% of GDP over and above what is presently coming in as annual inflows.


“On the demand side a higher investment rate of 35% will require at least 127 lakh crore of funds in corporate bonds… at the conservative level of credit to GDP of 75% the cumulative funds from the banks system amounts of Rs 323 lakh crore. When we aggregate all these sources of external sources of financing then at 70% of debt to equity ratio we need equity mobilisation of 643 lakh crore by 2036 to support the envisaged growth,” he said.Setty said the need for such a huge amount of funds means that India has to ponder on how the equity markets will get more depth and liquidity. He warned against the reliance on derivates and said it is important to devise mechanisms so that private placements give way to more open offers.