Enable the Creation Of a High-Trust, High-Performance Economy

The bridge between reality and ambition comprises three pillars: enabling consumption to drive demand, investment to create wealth and healthy financial habits to manage wealth

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By Kunal Shah


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India is at the cusp of economic transformation, grappling with a gap between ambition and reality. Our ambition is to be a $5-trillion economy, while the reality is that around 90 per cent of our population makes less than INR 12,000 ($170) a month. The bridge between reality and ambition comprises three pillars: enabling consumption to drive demand, investment to create wealth and healthy financial habits to manage wealth. These pillars enable a high-trust, high-performance economy and form the core of taxpayers' expectations from the 2021 Union Budget.

Consumption is expected to constitute a $5-trillion economic opportunity by 2030. However, if just 10 per cent of India has the discretionary resources to consume, we are missing a massive opportunity. The way to drive consumption in the economy is by expanding access to credit and utilization of the same, even more so in the context of the pandemic. Individual credit is heavily under-utilized in India; just about 57 million Indians have credit cards which amounts to a little over 3 per cent of the population. Adding to this, the process of accessing credit—usually through loans—s designed to prevent default rather than encourage healthy utilization. Apart from easing access to credit for trust-worthy individuals, there is a need to change cultural norms around credit utilization. As a society we need to eliminate the shame and secrecy around credit access. After all, taking a loan is a reflection of confidence in future income, and reduces inequality by expanding opportunities to those who are not already at a financial advantage.

Our institutions need to create a desire among our best to live in India and create wealth here. Over 200,000 Indians are waiting for a green card to the US, and over $14 billion was sent abroad up from $1 billion five years ago. There is abundant capital, resources and intellect in India that could create immense value if invested locally. We need to create the right ecosystem for our smartest to stay back, celebrating wealth creators and easing their lives and work. Unfortunately, friction and unpredictability are baked into practically every interaction with public services: from registering a company to paying taxes. Moving services online, reducing paperwork and in-person checks, optimizing taxes and reducing time for the provision of services will collectively do more to spur investment. We need to create trust among taxpayers that the system supports their endeavors to create wealth for the country.

Credit utilization and wealth creation are unsustainable without healthy financial habits. The pandemic is a time of financial uncertainty for individuals and has reflected that today's working professionals do not have the systemic or institutional knowledge or financial advisory networks that the generational wealthy have access to. This makes it necessary for basic investment education, knowledge of financial instruments and insights to be provided upfront rather than in the fine print. By democratizing financial awareness and knowledge, we reduce friction in transactions and pave the way for a high-trust, high-performance economy.

Kunal Shah

Founder, CRED

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