5 developmental imperatives, including increasing credit intensity, would underpin India’s journey towards Viksit Bharat: Shaktikanta Das

Five developmental imperatives — increasing credit intensity, deepening the public issue market for corporate bonds, developing a stronger municipal bond market, stepping up the reach and depth of the insurance sector, and making India a pensionable society — would underpin India’s journey towards Viksit Bharat (Developed India) by 2047, said Shaktikanta Das, Principal Secretary to the Prime Minister.

Das underscored that first among the developmental imperatives is increasing the size and scale of the credit market. “India’s credit intensity as measured by private credit to GDP ratio needs to grow in a sustained manner.

To achieve this, credit footprints need to be expanded further in tier 2 and tier 3 cities as well as in the rural areas. “This would require higher but measured risk appetite and ability of financial institutions to fund small businesses, small business loans and agri-business.

They must also simultaneously focus on large projects covering next generation infrastructure corridors, energy transitions, advanced manufacturing hubs and rapid urbanization,” he said at a BFSI Summit organised by Business Standard.

So, financing the urban infrastructure and the requirement of urban bodies also is going to be very important in the coming years. Larger financial institutions are, in fact, better positioned to underwrite complex projects and absorb shocks in an increasingly volatile environment.

“The smaller financial institutions perhaps can look at tier 2, tier 3 cities, looking at small business loans, etc...On the other hand, the larger financial institutions can perhaps focus on large infrastructure and other manufacturing projects.

Noting that the consolidation of public sector banks over the past decade has laid an important foundation, Das emphasised that the next frontier is creation of institutions with scale, resilience and international presence to compete alongside the world’s largest or the leading banking entities.

The second point that Das highlighted is deepening the public issue market for corporate bonds. Currently the corporate bond market accounts for around 15 to 16 per cent of GDP with outstanding issuances of around ₹53.6 lakh crore in financial year in FY25.

“A thriving corporate bond market can complement the banking system and help in meeting the funding requirements of our growing economy. At present, corporate bond issuance remains dominated by private placements and high-rated borrowers, with limited liquidity and investor participation.

“Expanding the public issue route would encourage greater retail and institutional engagement, improve price discovery, and create a more diversified investor base,” he said. In the context of households’ balance sheet, the former Governor underscored that the risk appetite of households has increased — they are willing to diversify their financial asset ownership.

So, a deep and liquid corporate bond market can provide an additional investment avenue for the households. Third, developing a stronger municipal bond market is important as India’s rapidly organizing economy requires massive investments in urban infrastructure and public services.

“These financing needs cannot be met through internal accruals or government transfers alone. Municipal bonds must, therefore, emerge as an important instrument for mobilizing long-term capital for urban development. “While the municipal bodies themselves need to improve their governance, their accounting systems, their institutional and leveraging capacities, the BFSI sector, on the other hand, can play a catalytic role by enabling urban local bodies to improve their financial capacity, develop bankable projects, and access capital markets,” he said.

Fourth, despite rapid growth of the insurance sector in recent years, and even as India has emerged as world’s tenth largest insurance market by premium volume, with premium collections of nearly ₹11.9 lakh crore and assets under management exceeding₹74 lakh crore, the reach and depth of our insurance sector need to grow further.

“Against this backdrop, the vision of insurance for all by 2047 seeks to transform insurance from a financial product into a universal social safety net, ensuring that every citizen has access to adequate life, health, and property cover while every enterprise is equipped with appropriate risk protection.

“This ambition would require sustained efforts to enhance affordability, deepen distribution, leverage digital innovation and strengthen insurance awareness across the country,” he said. Fifth point is making India a pensionable society through asset-backed pension schemes.

Pension systems protect the elderly from financial stress, improve health outcomes, and provide economic security across generations.