Rajeshwar Rao: Inaugural address - Second Annual Conference on Macroeconomics, Banking and Finance

Inaugural address by Mr Rajeshwar Rao, Deputy Governor of the Reserve Bank of India, at the Indian Institute of Management Kozhikode (IIMK) - National Stock Exchange (NSE) joint Second Annual Conference on Macroeconomics, Banking and Finance, Mumbai, 21 February 2025. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

Good Morning All!

I thank IIM, Kozhikode and the National Stock Exchange for inviting me to deliver the inaugural address at this Conference. The theme for the conference- "Finance for Growth Amid Creative Disruptions"-captures the essence of the transformation we are witnessing in the financial sector – not just in India but globally. Disruptions in finance are not new, but what sets this era apart is the unprecedented pace and scale of change, fuelled by digitalization, artificial intelligence, and the resulting confluence of these changes leading to emergence of new business models. These changes make it essential for us to understand how to harness them for sustainable economic growth.

For India, this transformation is particularly significant as we strive towards Viksit Bharat 2047 - a vision of a developed and self-reliant economy. Our goal of becoming an advanced economy by 2047 will require us to effectively integrate technology with finance to deepen markets, expand financial inclusion, and drive economic productivity.

Creative Disruption vis-à-vis Creative Destruction

Innovation in finance has always been a double-edged sword-on one side, it drives efficiency and inclusion, but on the other, it can destabilize traditional structures if not managed well. This is where the distinction between creative disruption and creative destruction becomes crucial. While both terms may seem similar, they carry very different implications. Creative destruction, as popularized by economist Joseph Schumpeter, refers to the complete dismantling of old systems to make room for new ones. In contrast, creative disruption is a more nuanced process-it's about evolving existing systems, refining them, and making them better through technological innovations. We are not simply looking to replace what exists but to transform it for the better.