On why the government unsuccessfully keeps on nudging private companies to increase investment, the CII president told PTI that the period between 2016 to 2019, was not good for growth and in 2020 there was COVID.
“We have circumstances beyond our control which hampered demand … We did come out of the COVID much faster,” he said, adding there are signs of improvement.
Citing the CII’s annual CEOs survey, he said all sectors have crossed 75 per cent capacity utilisation and the figure was 80 per cent in key sectors like cement, steel, chemicals and machinery.
“We are at the cusp of where private sector capex will see a significant increase happening,” he said, adding that as per the CMIE data investment commitment of Rs 25.7 lakh crore was made last year, as compared to Rs 14.3 lakh crore a year ago.
Last year in September, Finance Minister Nirmala Sitharaman sought to know from the industry what is holding it back from investing in manufacturing, even though foreign investors show confidence in India. Drawing a parallel between India Inc and the mythological character, ‘Hanuman’, Nirmala Sitharaman said the government is willing to engage with the industry and take policy action. On the question about when the investments will happen, he said: “I think you will shortly get the answer… Now we see that visibility.”
When asked about the pressure points, Dinesh said at the global level the world economy itself is facing issues and at present no other country in the world is getting near to their normal growth rates.
“From the domestic side, I think the only big worry for us is the El Nino effect on the monsoon,” he said adding, however, El Nino does not necessarily mean that there will be a low rate of growth.
After a rare triple-dip La Nina, there is a probability of the warming of the equatorial Pacific Ocean in the coming months, called the El Nino phenomenon, that is associated with higher global temperatures, and it is likely to impact monsoon in India.
La Nina refers to the phase of cooling of the sea-surface temperatures than normal.
Further, he said that the continued focus of the government on increasing spending to develop modern infrastructure is a “big blessing” in ensuring that the economy grows and is also building a virtuous cycle.
The other big advantage is good balance sheets of corporates and banks, he said, adding “that gives us the comfort that overall we are in a very resilient position”.
The government can not do much to address the global headwinds and the monsoon is also beyond their control.
Replying to a question about possible impact of global economic uncertainties on India’s exports, he said despite all odds, the country’s outbound shipments are recording a healthy growth rate.
“Today we see some of the worrying factors starting to alleviate,” Dinesh added.
Further, on Germany entering into economic recession and its impact on India’s exports, he said that as per the feedback, the recession is not going to be long-drawn and in fact it is for a very short period.
However, he added that “if it becomes totally negative, means if it comes into negative territory, then it is something we have to be worried about. But today we don’t see that.”
Data released by the Federal Statistical Office on Thursday showed that Germany’s gross domestic product (GDP) declined by 0.3 per cent from January to March. This follows a drop of 0.5 per cent in Europe’s biggest economy during the last quarter of 2022.
India’s export to Germany stood at USD 10.2 billion in 2022-23.
He also said that the chamber is pushing for free trade agreements with countries like Canada, European Union and the UK to increase trade and investments.