The Confederation of Indian Industry (CII) has upped its GDP growth forecast for the current fiscal to 6.8 per cent from 6.7 per cent projected earlier, its President R Dinesh has said.
“This upward revision in projection is because of good performance of economy in first two quarters. We didn’t expect the recent Q2 GDP growth number to surprise us at 7.6 per cent,” Dinesh told businessline in an interview here.
Infact, CII has been quite conservative even now at 6.8 per cent given that already in the first half this fiscal GDP growth has touched 7.7 per cent, he said.
- Also read: RBI to retain 6.5% interest rate as economic growth comfortable, inflation in check: Experts
After assuming charge at the helm of CII in end May this year, Dinesh had projected GDP growth of 6.5-6.7 per cent for current fiscal with his optimistic view pegged at 6.7 per cent.
“Now, we are revising it to 6.8 per cent. Infact for next fiscal (2024-25), we are now projecting a GDP growth of 7 per cent. So far, we didn’t have a number for next fiscal. However, since we now have visibility, we are saying it,” Dinesh added.
CII President expressed confidence that investments — both private and public investments — will further go up in the second half this fiscal.
Dinesh said that both public and private investments will work in a “tango” this fiscal and already so far this fiscal both have been focused on investment push in equal measure.
- Also read: Strong Q2 GDP Show: Goldman Sachs, Morgan Stanley and Citi raise yearly GDP growth forecasts
He said that a significant majority of CII members are now saying that the second half is going to be better than H1– for investments, growth and export growth.
“For three quarters, almost all sectors are talking of 75-95 per cent capacity utilisation. With these facts on the ground, I can’t imagine that investments won’t take place,” Dinesh added.
There has to be significant focus on employment generation. Sectors like tourism, logistics and domestic consumption led sectors need to be focused.
“Our government’s focus on infrastructure has completely changed the India story globally. We will continue to be an attractive destination for FDI flows so long as we keep the cost of doing business low.
“You should not look at FDI from 3-6 months. You should look at it from 12-18 months. I do see more and more MNCs setting up centres and businesses here,” he said.
Industry’s big ask from government will be continuity — continue infrastructure spending, making sure the fiscal deficit is well managed and employment generation happens, Dinesh said.
Dinesh said that there is clear consensus across all the States that growth is going to happen with capital expenditure focus. “If I remember right,17 States have grown capex significantly,” he said.
Government’s focus on digitalisation, especially on GST, has brought huge dividends for the economy. The macroeconomic and geopolitical tailwinds are placing India in a unique position and enhanced the attractiveness of the country as an investment destination.
“The narrative and investment strategy for global investors is no longer looking at India as China plus 1. It is India direct and it is India as a specific focus either for domestic or for export markets”, he said.
INCENTIVISE EMPLOYMENT CREATION
Dinesh said that India should look to further incentivise industry for employment creation in the country by framing a specific scheme such as an Employment Incentive Plan (EIP) linked to job creation.
This could be patterned on the lines of production linked incentive (PLI) scheme, which has boosted investment sentiment in the manufacturing sector in the country.
“Direct tax rebate is already there from first time employment perspective. More needs to be done to create employment and skill development. In a way providing more incentives for job creation by introducing will be Crowding in private investment to benefit the private sector,” he said.
MONETARY POLICY REVIEW
Asked about CII’s expectations on ongoing monetary policy review (runs from Dec 6-8), Dinesh said “We don’t want them (RBI) to raise policy rates, we expect them to pause”.
He said that inflation issues are not entirely within the control of policy makers in India.
Several commodities’ prices softening in recent months augurs well for capex spend in the country, he added.