CII estimates India’s GDP to record a robust 8 per cent growth in FY25 based on expectations of next-gen reforms being carried forward in mission-mode: says newly elected CII President Mr Sanjiv Puri
Projecting a robust outlook for the Indian economy for the current year, Mr Sanjiv Puri, President, CII, stated that “the growth rate is poised to touch 8 per cent during the current year marking the fourth consecutive year of above 7%+ growth”. While the growth estimate is above consensus, the experience of previous years is that India has outperformed initial estimates by a wide margin. “The growth estimate hinges critically on addressing the unfinished reform agenda on priority, in addition to improvement in world trade prospects aiding our exports, twin engines of investment & consumption doing well and expectations of a normal monsoon among other factors”, Mr Puri added. He was addressing the media for the first time after taking over as President CII.
He further enunciated that “the stellar growth performance, expected during the current fiscal, is propelled by six growth drivers which have pivoted the economy to an accelerator mode. The participation of private sector investment in the India growth story, public investment in physical and digital infrastructure, a well-capitalised banking system, booming capital market and reduced dependence on oil are igniting the India growth story”. In a milieu marked by moderating inflation, the prognosis reaffirms that the Indian economy has gained in resilience despite global headwinds. Favourable geo-economic conditions would play a facilitative role as the sixth driver aiding the rising trajectory of India’s growth, Mr Puri stressed.
Elaborating on the important policy agenda, to set the growth momentum firmly in place, Mr Puri outlined a 14-point agenda for the new government for driving the next phase of economic transformation.
First, many of the next generation reforms lie in the state & concurrent domains and require tough consensus building to take them forward. Inter-State Institutional platforms on the lines of GST Councils can be created.
Second, government must continue with its capex led growth strategy along with fiscal consolidation. Part of the windfall dividend of Rs 2.1 lakh crore from RBI, could be used to increase capital expenditure by 25 per cent in FY25 from the RE figure of Rs 9.5 lakh crore for FY24.
Third, building India’s human capital should be a priority for inclusive growth and for industry competitiveness. The government should lay down roadmaps to raise the expenditure on public health (to 3% of GDP) and education (to 6% of GDP) by 2030 and focus on skill development initiatives.
Four, India is one of the youngest countries globally. Quality employment and livelihood generation at scale is essential to meet the aspirations of the youth, for demand generation in the economy and for inclusive growth. Employment Linked Incentive (ELI) schemes with appropriate outcome indicators can be launched for labour intensive sectors with high growth potential such as Toys, Textiles & Apparels, Woods based industries, Tourism, Logistics among others. The ELI scheme can also address the low female participation rate by giving a higher incentive for hiring of female labour. Besides, an International Mobility Authority should be set up to track employment opportunities in other countries and facilitate Indian youth to benefit from these opportunities.
Five, focus on strengthening Ease of Doing Business to enhance the competitiveness of Indian industry and its ability to expand its global footprint. Priority should be given to further easing the regulatory and compliance burden through simplification, rationalisation and decriminalisation of regulatory approvals and compliances, time bound clearances using the National Single Window System, strengthening alternate dispute redressal system and adoption self-declaration/third party certification and deemed approvals, wherever feasible.
Further, interventions in the areas of Land, Power and Logistics, are required to reduce the cost of doing business. For Land, States must be encouraged to bring down stamp duty on land transfers to 3-5%. To reduce power costs, cross subsidisation of power by industry other user segments should be phased out. For Logistics, as underlined in the National Logistics Policy 2022, digitization aiming towards paperless logistics should be continued which will help to save significant time and cost.
Six, with technology poised to emerge as a critical driver of India’s growth, strategizing and rethinking government policy towards technology assumes special significance. The operationalisation of the Rs 1 lakh crore fund for encouraging innovation R&D in the private sector, announced in the Interim Union Budget 2024-25, should be expedited in consultation with industry.
Seven, India should step up its engagement with the world to increase its global footprint and deepen its integration with the Global Value Chains. India should set up a Global Trade Promotion Body with dedicated overseas offices for branding and promotion activities and providing marketing services to Indian exporters. It is important for these offices to be staffed by professional, high-caliber marketing personnel. A comprehensive strategy related to Standards and other technical regulations could ensure better market access for Indian exports.
Eighth, Green growth is both an opportunity and a necessity. At a time when extreme weather conditions are becoming more frequent, intense and prolonged, the government should come out with an action plan to tackle climate change. To move in this direction, de-carbonisation plans and just transition roadmaps should be prepared with industry participation. A National Commission on Adaptation, setting up a National Mission on Water Security and a Green Transition (Mitigation and Adaptation) Fund to accelerate decarbonisation should be considered for transitioning towards the net zero goals.
Ninth, India’s financial sector stands robust. However, the sector needs to expand rapidly to be able to support the funding needs of a rapidly growing economy. Measures such as implementing the decision to privatize two public sector banks; diversifying sources of funding for NBFCs to help them to expand their reach; reviewing the priority sector lending framework every 3-4 years; making available long term patient capital from insurance and pension funds for infrastructure projects are important to finance India’s growth journey.
Tenth, tax reforms should be continued to help boost the investment climate, investor confidence and overall competitiveness of the economy. On direct taxes, the Government may consider laying down a roadmap for rationalising and simplifying the capital gains tax and the TDS provisions.
On indirect taxes, the next set of GST reforms such as bringing GST under the three-rate structure with moderation of rates and bringing Petroleum products, electricity, and real estate under GST should be expedited in consultation with the GST Council. Further, to facilitate India’s engagement with the GVCs, a three-tier import duty structure should be considered, with raw materials at the lowest rate followed by intermediates and then the finished goods.
Eleventh, is bringing concerted focus on Agriculture by building consensus between the Centre and states on agri reforms. An Inter State Agri Reform Council should be created to help build this consensus. Further, steps such as launch of new converged programs for Producer collectives to boost farmers’ income; developing warehousing infrastructure to reduce waste; setting up a National Grid for Market Intelligence and Crop Planning etc; adoption of technology in agriculture and pursuing stable agri-export policy require due attention.
Another critical area for achieving the goal of a developed India is rural development. Industry engagement with the National Rural Livelihood Mission; developing rural industrial parks; launching smart village programme are some suggestions to strengthen rural development.
Twelfth, Tourism should be a key priority sector for driving growth with employment. To boost the sector’s growth potential, release of National Tourism Policy should be accelerated. In addition, a marketing campaign, Incredible India 3.0 could be launched, with brand ambassadors appointed in targeted countries to promote Indian tourism.
Thirteenth, relates to start-ups wherein CII has suggested creating physical (a single-roof) and digital infrastructure with a Startup Incubator, Accelerator, Investors, Academic & Research Scholars with end-to-end facilitation support for the startup - Ideation to Innovation. These should be available to youth in Tier 2/3 cities as well. Emphasis on simplifying regulations and compliances, including those related to taxation, should continue.
Fourteenth, building an environment of trust matters. Some initiatives in this direction include moving towards transparent, faceless, digital systems of approvals and appeals through self-certifications, third-party certifications, extensive decriminalisation.
Mr Puri enunciated that CII has identified '“Globally Competitive India: Partnerships for Sustainable and Inclusive Growth” as its Theme for 2024-25. CII has planned several new Missions for the current year including – Climate Adaptation, Health for All, Responsible AI and Digital for Social Good.
In addition to the Missions, CII has also planned several new initiatives in the current year including the setting up of the CII Alternative Dispute Resolution Centre. Recently the Prime Minister Narendra Modi launched the CII-TVS Mobility Centre of Excellence on Employment and Livelihood. Further, the CII-Rahul Bajaj Centre of Excellence on Skills will set up High-tech AI driven sectoral skill labs in high growth sectors like Manufacturing, Healthcare, Hospitality, Financial Services, IT/ITES & UI/UX, Automotive (incl EV), Green Energy and Drone Technology.
Such initiatives will help the Indian economy to stand out on a robust track and strengthen the foundations of our journey towards India@100.
13 June 2024
New Delhi