Page 2 - CII Artha Magazine 2022

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