Need to enhance rural investment through public capex: CII President Sanjiv Puri

Need to enhance investments in rural through public capex: CII President Sanjiv

ITC Chairman and MD Sanjiv Puri, who has also been named the Chairman of the Confederation of Indian Industry (CII) recently, feels that there is a need to enhance rural investment through public capex. He was speaking exclusively to Moneycontrol on the trajectory of the Indian economy.

"As far as public capex is concerned, there should be sharper focus on the rural, housing, and agriculture sectors, among others," said Puri. He highlighted that the cluster-based approach outlined in the interim budget, which focusses on commodities, is the right way to go and an important intervention. The cluster-based approach builds groups of small landowners, and facilitates the allocation of resources to and creation of linkages in areas with high growth potential.

The cluster based approach is a measure by the government to enhance productivity in certain industries. For example, a cluster based or a value chain approach through public private partnership will lead to collaboration between farmers, state, and industry for input supplies, and market linkages.

Anticipating better agriculture sector performance, Puri estimates eight percent GDP growth for FY25. He expects the monsoon to be better, which will lead to a better harvest this year, and help ease the inflation.

“CII estimates eight percent GDP growth this year, because we expect the agriculture sector to perform better. Its performance would ease food inflation, which is sticky right now,” asserted Puri.

He added that this will lead to moderation in headline inflation and bring down interest rates in the second half of the fiscal year, and highlighted that CII's forecasts indicate that global trade will improve in the coming year.

With the prices of vegetables, pulses, and cereals staying elevated, food inflation remained virtually flat at 8.69 per cent in May 2024 compared with 8.7 percent in April. Rural inflation is still over five percent.

Puri thinks India's  8 percent growth in FY25 will be supported by inflation rates aligning closely to the RBI's (Reserve Bank of India's) target of 4 to 4.5 percent.

Agriculture, industry, and services will "fire up" the economy, Puri said, and added that a better monsoon would help agriculture grow at 3.7 percent.

However, on June 15, the Indian Meteorological Department (IMD) said in a press release that heavy to very heavy rainfall, with isolated extremely heavy showers, are very likely to continue over sub-Himalayan West Bengal, Sikkim, Assam, and Meghalaya for the next four to five days. Meanwhile, heat wave conditions are likely to persist over many parts of north India for the next three to four days, but abate thereafter.

“Uncertainty of weather events is a reality today,” said the CII President.

In a 14-point agenda shared with the government, the CII has suggested that a  National Commission of Adaptation should be created to look at (environmental) adaptation holistically, and build resilience and efficiency in the agriculture sector.

“Besides interventions in agriculture and public capex, one of our suggestions is to empower rural India with social infrastructure. This will go a long way,” he explained.