Page 4 - CII ARTHA India’s Growth Prospects
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Message From Director General

                                                                                                                                                                                                   Chandrajit Banerjee, Director General, CII

                                                                                                                               G    lobal growth prospects have     Government’s increased capex spending   risks.  External demand scenario is also
                                                                                                                                                                    especially on infrastructure was cited as
                                                                                                                                                                                                        improving with good exports posting an
                                                                                                                                    started to improve as headline
                                                                                                                               inflation has ebbed in the major     the biggest positive for India’s growth in   uptick since last few months on the top
                                                                                                                               developed economies. The latter has   the near term, apart from high revenue   of service exports already doing well.
                                                                                                                               raised the possibility of interest rates   generation and strong financial markets.  With range-bound commodity prices
                                                                                                                               moving south during the current year to   Encouragingly, the Interim Budget which   keeping a lid on imports, the current
                                                                                                                               provide more support to growth.      was presented in the first week of   account deficit is expected to be
                                                                                                                               However, geopolitical instability remains   February has continued its thrust on   eminently under control in this fiscal.
                                                                                                                               the biggest imponderable to global   cushioning economic growth through
                                                                                                                               growth which became evidently clear   step up in capital spending. With an eye   Going forward, there is optimism that
                                                                                                                               from the recent turbulence in a critical   firmly on achieving fiscal consolidation,   the country would navigate global
                                                                                                                               trade route which has threatened to   the fiscal targets outlined for 2024-25,   uncertainties and touch 7.0 per cent
                                                                                                                               derail the supply chains.            signal Government’s intent to achieve   growth in 2024-25 as well, on the back
                                                                                                                                                                    the fiscal glide path. Importantly, the   of strong momentum of economic
                                                                                                                               On the domestic front, the optimism on   transparency seen in the successive   activity seen in the country. The Reserve
                                                                                                                               India is at an all-time high, both   budgets, by continuing to depend on the   Bank of India (RBI) expects India to
                                                                                                                               internationally and domestically in large   gross budgetary support for capex   grow at 7.0 per cent and above for four
                                                                                                                               part due to the government’s proactive   rather than on public sector units   consecutive years from 2021-22
                                                                                                                               policies. The latest advance estimates   (PSUs), or the internal and external   onwards.
                                                                                                                               which pegged the full year GDP growth   budgetary resources (IEBR) route- also
                                                                                                                               at 7.3 per cent for FY24, took even the   referred to as off-budget, is laudable.
                                                                                                                               optimists by surprise. This sanguinity is
                                                                                                                               reaffirmed by the latest reading of the   The niggling domestic concerns
                                                                                                                               CII Business Confidence Index (CII-BCI),   emanating from factors such as high
                                                                                                                               which zoomed to an eleven-quarter high   inflation are now more-or-less under
                                                                                                                               of 67.8 in the Oct-Dec quarter of FY24   control, being prone to only intermittent
                                                                                                                               as compared to a reading of 67.1 in the   shocks. The rising spectre of food prices
                                                                                                                               previous quarter and 67.6 in the same   and global commodity price gyrations   Chandrajit Banerjee
                                                                                                                               quarter last year. Specifically,     through the year are the major upside   Director General, CII

                                                                                                                                                                                                             ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY  05
                                                                                                                                                                                                                  QUARTERLY JOURNAL OF ECONOMICS
                                                                                                                                                                                                                             FEBRUARY 2024
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