Confederation of Indian Industry (CII) President R. Dinesh addresses during a press conference,in New Delhi on June 1, 2023.
| Photo Credit: Kamal Narang
The Confederation of Indian Industry (CII) president R Dinesh on Thursday said the time is right for the central bank to move to a neutral monetary policy stance as inflation expectations have cooled off, and called for building consensus on critical pending reforms in sectors like labour, land, power and agriculture.
The new CII chief said they expect GDP growth to be in the range of 6.5% to 6.7% in 2023-24, and said reforms such as a universal GST with a rationalised three-rate structure and improving contracts enforcement could spur growth higher to average 7.8% in the 8-year period till 2030-31, compared to the 6.6% average between 2012 and 2019-20.
“We are recommending that the Reserve Bank of India shift its stance to neutral, which also helps the perception of how Indian industry and Indian economy is perceived, considering that we are better placed than the rest of the world in terms of inflation expectations,” Mr. Dinesh said.
As per a CEOs’ survey by CII, nearly 72% of corporate honchos expect inflation to moderate to less than 5% this year. “While we do understand the necessary actions had to be taken, we believe this [continued pause in the key repo rate and a shift from the hawkish stance] will be a further tailwind for us,” he said.
Mr. Dinesh indicated that the country’s investment rate, as measured by gross capital formation to GDP, which stood at 31.1% in 2022-23, may reach or surpass the five-year high mark of 33.9% in 2017-18 over the near to medium term.
“While headwinds such as the global slowdown, tepid FDI flows, higher borrowing costs could impinge on growth prospects, we believe the tailwinds like the strong public capex and sustained domestic demand will outstrip the headwinds,” the CII president averred.
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