ICICI Bank 2014 Annual Report Download - page 4
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from 8-9% levels to sub-5% levels, does not slow
down any further and indeed, begins to revive. In
this context, the decisive mandate that has emerged
from the general election results is a very positive
development. With the worst of the slowdown and
volatility behind us, and a clear runway for policy
actions to harness India’s potential, the economy is
now seeing blue sky.
The first set of actions could be to harvest the low-
hanging fruit. The steps that had been initiated to
clear the bottlenecks in the investment cycle, in
terms of last mile clearances for projects, resolution
of fuel issues in the power sector and clearing
overdue receivables from government agencies to
the corporate sector need to be accelerated. These
The Indian economy and banking sector have faced
significant challenges in recent years. The challenging
business environment and moderation in economic
growth witnessed in fiscal 2013 continued into fiscal
2014. Manufacturing and industrial growth remained
weak and there was also a moderation in services
sector growth which had hitherto remained resilient
to the weakness in the rest of the economy. The
challenge posed by the current account deficit was
exacerbated due to global concerns over tapering
of quantitative easing in the United States, leading
to capital flight from countries with high current
account deficits. This prompted domestic monetary
policy action resulting in a sharp increase in interest
rates. Corporate sector activity remained muted and
expectations of seeing a revival in growth in fiscal
2014 proved to be optimistic.
There were some positive policy responses that
alleviated the immediate pressure. The process of
reigning in the fiscal deficit which began in the previous
year continued in fiscal 2014. The government and
the central bank together took a range of proactive
measures to address the current account deficit
and currency volatility. These measures stabilised
the currency by reducing the current account deficit
sharply and bringing in foreign currency fund flows.
While some of these measures are necessarily short
term in nature, they sent a signal that we have the
tools available to prevent market volatility and defend
the currency against speculation.
We are now at a critical juncture in terms of the
direction that our economy can take. The key priority
is to ensure that GDP growth, which has come down
K.V. KAMATH
Chairman
Message
from the Chairman
2