New Delhi: The Reserve Bank of India’s (RBI’s) decision to hike key interest rates and a good monsoon will help in containing rising inflation, newly elected president of industry body CII Sanjiv Bajaj said on Monday.
Bajaj, while addressing his maiden press conference after taking over as the CII chief, said several factors combined with the hope of a strong monsoon “should put us in a better place” by the second half of the year for policymakers to decide where inflation and interest rates move.
"I do believe that we are now in an era of higher interest rates. This will help us in bringing down inflation, at least a part of that going forward," he said.
The industry body estimates that India’s GDP growth, depending upon the global oil prices, to be in the range of 7.4 - 8.2 per cent.
Bajaj, who is chairman and managing director of Bajaj Finserv, took over from T V Narendran, CEO and MD, Tata Steel, as the head of CII.
He, said, “CII expects the GDP growth in a range of 7.4-8.2 per cent in 2022-23, with the outlook critically hinging on the trajectory of global crude oil prices.”
He explained that global headwinds and inflation will have to be countered with robust policy reforms, both domestic and external sector reforms, to unlock the growth potential of the economy. Tailwinds that are supportive of growth in the short-term include government capex, private sector investment which is showing an uptick aided by strong demand in some sectors and the PLI push in the others, good agriculture season on the back of the expectations of a good monsoon and positive export momentum”.
During his speech, Bajaj mentioned that the rise of inflation has two aspects, demand and supply side.
"RBI has already started the cycle of taking interest rates up and we should expect interest rates to continue moving up in the coming year. We would expect from RBI a clear direction to how they are going to address interest rates. Hopefully in the next monetary policy review we should be able to hear from them something to that extent," he said.
CII’s theme for 2022-23 is Beyond India@75: Competitiveness, Growth, Sustainability, and Internationalisation.
Bajaj said that India has the potential to become a $40 trillion economy by the time it turns 100, in 2047, with milestones at $5 trillion by 2026-27 and $9 trillion by 2030-31.
For India, he mentioned, manufacturing and services will be the twin engines of growth. The application of policies of the government, mainly the PLI schemes, are expected to push manufacturing sector's contribution in gross value addition to 27 per cent by FY48, while, the services sector will see its share rising from 53 per cent to 55 per cent in the terminal year.
The contribution of exports to the GDP must rise while the investment rate must be stepped up. Both the government and industry must be equal partners in achieving this, the CII president said.