Use a part of Rs 2.1 lakh crore RBI dividend windfall to raise capex, says CII President Sanjiv Puri

Public capex momentum is strong, it is still infrastructure that’s powering the nation; domestic demand is expected to be better, he said.

Projecting an 8 percent growth this fiscal, Puri said it would be supported by inflation rates aligning closely to the RBI's target of 4 to 4.5 percent.

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

"The data available suggests a favourable monsoon this year, which will significantly benefit the agriculture sector," Puri said.

Stating that the services sector would see growth in H2 FY25, Puri forecasted year-on-year (Y-o-Y) growth to be higher at 9 percent compared to 7.9 percent. The manufacturing sector growth is likely to slow down from 9.3 percent in FY24 to 8.4 percent in FY25, mainly due to the high base effect, he said.

Growth triggers

Policy interventions aimed at easing business operations and strong performance and high-frequency economic indicators are expected to bolster growth, he said.

The continuation of public capital expenditure growth will further accelerate the economy's pace, helping India to become a $7 trillion economy by 2029-30, he said. This growth is expected to significantly increase per-capita income within a decade, thereby boosting consumption.

Private sector investment, which had previously been a concern, has shown remarkable improvement, rising from 20.7 percent of GDP to 23.8 percent, surpassing pre-Covid levels.

This investment growth is seen across various sectors, including cement, steel, electronics, manufacturing, food processing, telecom, pharmaceuticals, logistics, renewable energy, automobiles, electric vehicles, and semiconductors, Puri said.

The favourable investment climate is further supported by policies like the Production Linked Incentive (PLI) scheme and reductions in corporate income tax rates.

Another factor supporting India’s growth acceleration, the CII President highlighted, is reduced dependence on oil, which has added to competitiveness and resilience.

Despite these positives, the CII president spoke of several risks to growth. "India is not isolated from the rest of the world and we do have our share of risks. The risks arise from the geopolitical dynamics and conflicts; interest rates that have been on hold for longer; global commodity prices are significantly above pre-pandemic levels; and climate emergency is a risk for the whole world,” Puri said.

The CII suggestions

Puri suggested adopting a three-tier import duty structure to facilitate global value chain integration. Further, he proposed initiatives to bolster rural development through industry engagement with the National Rural Livelihood Mission and the development of rural industrial parks.

He said the Centre should encourage states to reduce stamp duty on land transfer to three to five percent.

The other key CII demands include reducing the cost of doing business in areas such as land, power, and logistics, phasing out cross-subsidisation of power costs, and continuing digitisation efforts in logistics as outlined in the National Logistics Policy 2022. Puri urged the government to operationalise the Rs 1 lakh crore fund for private sector innovation and R&D.

Addressing climate change through de-carbonisation plans, adaptation roadmaps, and establishing a National Mission on Water Security were also highlighted.