“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 here on June 4.
A 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 utilisation for 2017-18 stands at a 4-year high of 74.1 per cent 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 its 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,” Mr Mittal continued.
Recent data too indicates that robust performance is underway as mentioned in the RBI press release. 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 per cent in the last quarter of 2017-18. Consumption growth also expanded at 6.7 per cent in the quarter.
According to CII, agriculture and rural economy performance is likely to improve significantly with monsoon rainfall predicted at 97 per cent 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 per cent in 2017-18, and continuing at 76 per cent in April 2018. Two-wheeler and tractor segments, too, recorded notable growth rates over the fiscal year, CII said.
Exports grew in April at over 5 per cent 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,” Mr Mittal concluded.