“The economy is on a continuous upward trajectory, moving from strength to strength to meet elevated consumer and infrastructure demand. With GST now well settled, industry expects sustained strong sentiments which will power future growth in coming months,” said Mr Rakesh Bharti Mittal, President, Confederation of Indian Industry (CII). He was speaking after a CII meeting of top industrialists held in Pune on 4th June 2018.
The CII press statement noted that at the meeting, industry captains affirmed that the Goods and Services Tax (GST) compliance was streamlined. In sector after sector, positive sentiments were echoed, and confidence regarding the overall economic climate was expressed. “Third quarter capacity utilization for 2017-18 stands at a 4-year high of 74.1%, implying that investments will now gather pace. This is certainly a huge boost to the economy,” noted Mr Mittal.
Alluding to the Monetary Policy announcement earlier in the day, Mr Mittal, went on to say that CII has noted the increase in interest rate but the forecast of monsoon is very healthy and as it pans out, the little pressure that is there on food prices would ease and that should encourage RBI to revert to their benign stance on interest rates.
The manufacturing sector representatives pointed to strong performance across segments such as automotive, white goods, infrastructure, steel and ICT. Demand stands at healthy levels and there is buoyancy in spending, according to the industry leaders. “All sectors have been seeing robust demand conditions, picking up from the rural economy, and industry is confident that with normal monsoons for most of the country, this will remain a powerful stimulant for growth,” stated Mr Mittal.
Recent data too indicates that robust performance is underway, as mentioned in the RBI press release today. The performance of core industries went up in April, and cement output expanded at double-digit pace for six straight months. Sharp growth has been witnessed in investment which grew by 14.4% in the last quarter of 2017-18. Consumption growth also expanded at 6.7% in the quarter.
According to CII, agriculture and rural economy performance is likely to improve significantly with monsoon rainfall predicted at 97% of the long term average for 2018.
Alluding to the sustained performance of the construction sector, the release pointed out that this has led to resurgent growth in commercial vehicle production at over 30% in 2017-18, and continuing at 76% in April 2018. 2-wheeler and tractor segments too recorded notable growth rates over the fiscal year, said CII.
Exports grew in April at over 5% with major commodity groups of engineering goods, organic and inorganic chemicals, drugs and pharma and cotton products recording growth at robust rates. The sector is a key driver of the Indian GDP and with growth firming up in major economies, it will continue to boost growth and employment.
With the economy gaining momentum, over Rs 50,000 crore worth of investments have been announced by India Inc in recent months, observed the CII statement. “We expect the investment pipeline to remain strong in coming days, led by public investment which is now resulting in crowding in of private investments,” said Mr Mittal.
6 June 2018