Reserve Bank of India (RBI) has said that promotion of young firms and startups and ensuring their survival is critical for greater employment generation and higher productivity-led economic growth. It is therefore essential to reorient resources and policy focus in this direction, RBI also said in its annual report for 2019-20.
The Indian IT firms are already leading globally in terms of developing applications using artificial intelligence (AI), machine learning (ML), robotics, and blockchain technology. "This niche advantage needs to be leveraged to strengthen India's position as an innovation hub, coupled with India's 'Start-up India' campaign which recognises the potential of young entrepreneurs of the country and aims at providing them a conducive ecosystem," RBI said.
Information and communication technology (ICT) has been an engine of the country's economic progress for over two decades now. So, the focus should be on leveraging the ICT for development of India's future strategy, it said.
There is also a need to lessen transaction and communication costs and improve the quality of capital, the central bank's report also said.
"While HealthTech and FinTech are the leading segments, Indian entrepreneurs can capitalise on opportunities across other sectors and markets, and increase the depth and breadth of this ecosystem, especially in serving small and medium businesses, and low and middle-income groups," the RBI annual report said.
Meanwhile, commenting on overall economic growth revival, RBI said that the government's consumption will continue to support current economic demand while private consumption will likely lead the recovery when it takes hold after the coronavirus outbreak eases. "The upticks that became visible in May and June after the lockdown was eased in several parts of the country, appear to have lost strength in July and August, mainly due to reimposition or stricter imposition of lockdowns, suggesting that contraction in economic activity will likely prolong into Q2," the RBI added.Also read: Biggest rise in RBI's balance sheet in last 13 years, jumps to a quarter of India's GDP