India is poised for 8-9 percent GDP growth trajectory, with potential to reach close to 10 per cent over the medium-term through structural reforms related to land and labour, R Dinesh, President, Confederation of Indian Industry (CII), said. 

However, achieving this depends on how the country navigates the global headwinds of “fluid geo political scenario” and global commodity price risks, Dinesh told businessline in an interview. 

“I can’t say it is a worry today. Since the geopolitical scenario is very very fluid, this is something we have to watch out for. Global commodity prices are also going up. All the growth forecasts we are giving out are based on certain assumptions,” he said. 

Dinesh highlighted that India’s focus on developing physical infrastructure and creation of world class digital public infrastructure in recent years has set the base for economic growth to gain further momentum. Another positive aspect is the government and RBI have been able to keep a lid on inflation. 

Also read: ADB raises India’s GDP growth forecast for FY25 to 7%

Asked if CII will revise its GDP growth forecast for 2024-25 in light of this optimism, Dinesh said the industry body’s growth estimate currently remains at “over 7 percent” as projected earlier and hinted that it may get revised upwards in the coming days. 

CII expects the next dispensation at the Centre to unleash land and labour reforms to fuel economic growth. 

“If we look at opportunities for economic growth, they are going to happen on back of big ticket reforms on land, labour and to certain extent see how we can help agriculture sector progress in a big way. 

“It is important to build consensus across all the States. It is important to build consensus on how we go about implementing this. For us at CII, economic growth is important and inclusive growth is even more important,” he said. 

JOB CREATION 

Dinesh called for the framing of an employment-linked incentive plan to boost job creation in the economy, especially in sectors such as tourism, logistics and health. 

“From pure data point, there is a clear evidence to show that jobs have been added in the economy. Increase has been good and quite significant. Good news in India are plethora of fundamental changes. Gig economy is also doing well. 

Also read: RBI retains FY25 real GDP projection at 7%; retail inflation at 4.5%

“There are certain sectors that are going to be significantly increasing the number of jobs like tourism, logistics and health. These are the sectors that need large amount of personnel and if we incentivise them, the sectors would get further formalised to  a great extent,” Dinesh said. 

PRIVATE INVESTMENTS 

Citing the high capacity utilisations in various industries ranging from 75-90 percent, Dinesh noted that private sector has been investing and it may not be right to conclude that they are shying away from investments in comparison to the Centre which had in recent years upped its capex spend substantially. 

“Capacity utilisation in industry is very high. In some sectors, it has crossed 90 per cent. What people are looking for are big ticket investment announcements from the private sector. 

Demand is very much there. We are sitting in a very very volatile world. Something or other happens to offset whatever we are planning. None of us planned for geo political conflicts such as Israel-Hamas. So decisions on investments are to some extent dictated by fluid geo political developments”, he said. 

Also read: Indian equity capital markets break records with $14.6 billion in Q1 fundraising, up 161.9% YoY

Dinesh highlighted the 126th CII Business Confidence Index (Jan-Mar 2024) where 71 percent of respondents expected improvement in private capex in H1 of FY25  vis-a-vis H2 of FY24. About 23 percent of the respondents were of the opinion that private capex will remain unchanged from its level in the previous first half.

Interestingly, more than half of the respondents said that the prolonged conflict in West Asia and Eastern Europe have had an adverse effect on their business outlook.

The 126th CII Business Confidence Index (CII-BCI) continued to maintain its upward trajectory, rising to a twelve-quarter high of 68.3 in the fourth quarter (Jan-Mar 2024) as compared to 67.8 in the previous quarter and the reading of 64.0 in the same quarter last year. The consistent uptick in CII-BCI came on back of the improving business sentiments aided by the resilience seen in the domestic economic activity, despite the recurring spate of geopolitical flashpoints.

SUPPORT FOR MSMEs

On micro, small and medium enterprises (MSMEs), there is a need to formalise the rating mechanism and continue the Emergency Credit Line Guarantee Scheme (ECLGS), which came into handy during the Covid-19 pandemic, Dinesh said. 

The next government need to create a small fund to support the ‘green transition’ of MSMEs, he said, adding that the third element of MSME package would be to address the digitisation element. 

Dinesh also expressed confidence that India —with GDP now estimated at $3.7 trillion —will become a $5 trillion economy in next three years. 

Related Topics
comment COMMENT NOW