Dinesh said that inflation should fall to 5.3%–within RBI’s target band of 2-6%— in FY24, so the central bank needs to change its stance from accommodative to neutral.
“The tailwinds for growth will offset the headwinds,” Dinesh said, addressing his first conference as CII president.
He further noted that 72% of over 630 CEOs participating in CII’s Annual Survey believed inflation would fall below the 5% mark in FY24.
Inflation in April had slipped to an 18-month low of 4.7%, inching closer to the 4% target.
Dinesh’s statements come a day after the GDP data release, which showed that the economy had outperformed, growing 6.1% in the fourth quarter of FY23. The FY23 numbers were subsequently revised to 7.2%.Healthy corporate balance sheets, continued capex thrust from the government, and a robust financial system are adding to the resilience of the Indian economy, Dinesh pointed out.Dinesh said that the private sector capex thrust might follow. “Our CEO survey shows that many sectors have exceeded 75% capacity utilisation,” he noted.
“The multi-dimensional reforms, along with fiscal and monetary policies, will help the Indian economy step up its GDP growth to a CAGR of 7.8% in the next decade (FY22-FY31) as compared to 6.6% in the previous decade (ex FY21),” he noted, further highlighting that the reforms witnessed on ease of doing and cost of doing business are on a far different level.
Although Dinesh lauded the government’s efforts highlighting that it has introduced not just pragmatic but transformational reforms, he emphasised more models for financing growth.
“If you need to have 7.5% growth, the government needs to work towards financing growth via long-term funds and finding innovative avenues for growth capital from banks.”
Besides funding, he laid down several other parameters like creating consensus on next-generation land and labour reforms and initiatives like the Trade & Investment Promotion Body, pushing India closer to its target of $2 trillion in exports, agriculture, energy transition and ease of doing business.
Dinesh also stressed the need for trust building, not just with the government, but between various stakeholders and argued that CII would work towards setting quality and consumer safety standards. Develop a sector-specific cost of doing business and come out with an annual manufacturing competitive survey.
CII will constitute a task force on building trust headed by Uday Kotak. Dinesh also noted that Sanjiv Puri, President-designate, will lead the Quality Mission 2.0 to set global standards and benchmarks for the world.
Growth spurt
– India to grow 6.5-6.7% in FY24
– Inflation to fall to 5.3%
– GDP growth CAGR of 7.8% for FY22-31