Page 2 - CII Artha Magazine 2022
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Message From Director General

                                                                                                                                                                                                   Chandrajit Banerjee, Director General, CII

                                                                                                                               T   his is a time of exceptional     The RBI’s reassurance to remain      What is more, despite the geopolitical
                                                                                                                                   difficulty for the world economy.
                                                                                                                                                                    accommodative with a focus on calibrated
                                                                                                                                                                                                         turbulence created by more than two
                                                                                                                               The ongoing Russia-Ukraine conflict and   withdrawal is encouraging.      months of war, many of our economic
                                                                                                                               consequent economic sanctions, US Fed   The spiraling inflation and attendant   indicators are flashing green. The core
                                                                                                                               monetary tightening and the pandemic   uncertainty could have a negative impact   sector has registered a strong sequential
                                                                                                                               shocks from China have reignited     on consumption demand, which has     growth; the manufacturing and services
                                                                                                                               uncertainties across the globe. The   barely managed to return to a little above   PMI are on the upward trajectory and
                                                                                                                               economic spillover effects are being felt   the pre-pandemic level in the last quarter.   exports are on the ascendent. Meanwhile,
                                                                                                                               worldwide. And India is no exception.                                     GST collections have hit a fresh high in
                                                                                                                                                                    And a revival of consumption demand is
                                                                                                                               Indeed, the Indian economy, which has   crucial for investment-led economic   April as economic activity is expanding
                                                                                                                               barely begun the recovery journey from   recovery. Moreover, fiscal pressures and a   and even private investments, which have
                                                                                                                               the multiple pandemic shocks, is now   widening current account deficit (CAD),   so far been elusive, have started showing
                                                                                                                               finding the macro-economic           triggered by the external conflict, will   early signs of a pick-up.
                                                                                                                               environment a lot more daunting. The   impact India's growth in the financial year   Hence, despite the economic
                                                                                                                               most significant challenge is in terms of   that has just begun.          uncertainties caused by war and its
                                                                                                                               elevated oil, metal and commodity    The war has also created some positives   impact on supply chains, our
                                                                                                                               prices which are aggravating supply   which bode well for the country.  For   macroeconomic indicators remain fairly
                                                                                                                               shocks to the economy and threatening   instance, while inflation is straining   strong. Going forward, the economy may
                                                                                                                               macro-economic stability. With nearly   household budgets, a spike in farmgate   suffer a moderate slowdown, but certainly
                                                                                                                               80 per cent of our crude oil needs   prices is raising rural incomes. Hence, a   not a dramatic fall in growth. India would
                                                                                                                               being met through imports, the       part of the inflationary impact is fueling   continue to remain the fastest growing
                                                                                                                               reverberations are being felt through   consumption and investment in the   economy in the world.  And in times to
                                                                                                                               higher inflation, widening trade deficit,   hinterland. Besides, the conflict has created   come, backed by conducive policies and
                                                                                                                               and weakening rupee.                                                      reform initiatives, it would take a lead in
                                                                                                                                                                    an unlikely export opportunity for India in
                                                                                                                               With inflation remaining above the RBI’s   items such as wheat and corn as well as in   shaping global growth.
                                                                                                                               tolerance level, the RBI has stepped in   processed food, steel, pharma etc.
                                                                                                                               and raised repo rate by 40 basis points.   Further, Ukraine and Eastern Europe
                                                                                                                               As a result, the pandemic induced cut in   were lately providing tech talent pool to
                                                                                                                               policy support effected in 2020 has now   the West. Now demand for Indian IT
                                                                                                                               been withdrawn.  It has also hiked the   talent could rise. Several European
                                                                                                                               cash reserve ratio to withdraw liquidity.   nations are also experiencing a shortage
                                                                                                                               With major central banks including the   of skilled personal, engineers and doctors.
                                                                                                                               US Federal Reserve continuing their   India, with its huge reservoir of skilled   Chandrajit Banerjee
                                                                                                                               journey of monetary policy normalisation,   manpower, could well fill in the gap.   Director General, CII
                                                                                                                               a rate hike by the RBI had been expected.

                                                                                                                                                                                                             ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY  03
                                                                                                                                                                                                                  QUARTERLY JOURNAL OF ECONOMICS
                                                                                                                                                                                                                               MAY 2022
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