He said a variety of factors, coupled with the expectation of a strong monsoon, would require policymakers to decide in the second half of the year where inflation and interest rates would go.
Bajaj has observed that there are two aspects to the rise in inflation – demand and supply.
“The RBI has already started the cycle of raising interest rates and we should expect it to continue to rise next year. We will expect a clear direction from the RBI on how to deal with interest rates. We should be able to hear something in quantity, ”he said.
The CII estimates that India’s GDP growth will be in the 7.4 – 8.2 percent band, depending on global oil prices.
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Sharing the potential growth scenario for the Indian economy for this year, Bajaj said, “CII expects GDP growth to be in the range of 7.4-8.2 per cent in 2022-23, a view critically focused on the global crude oil price movement.”
He spoke to reporters for the first time since taking over as CIA president. He further explained that in order to unlock the potential for economic growth, global headwinds and inflation need to be tackled through strong policy reforms, both domestic and foreign sector reforms.
Bajaj said that the short-term growth of Telwind includes public capex, private sector investment which is helping strong demand in some sectors and growth through PLI (Production-Linked Incentive) scheme, good agricultural season. Behind the expectation of a good monsoon and positive export momentum.
An immediate way to moderate inflation could be to reduce taxes on fuel products, which make up a large portion of petrol and diesel retail pump prices. “The CII will encourage the central and state governments to cooperate in reducing these responsibilities,” he added.
Sharing the outlook for the economy, Bajaj said that India has the potential to become a 40 40 trillion economy by the time it reaches 100 years in 2047, with USD 5 trillion between 2026-27 and USD 9 trillion between 2030-31.
Highlighting the sectoral drivers of growth, he elaborated that production and services would be the twin engines of growth. The active policy of the government, especially the PLI project, is expected to push the contribution of manufacturing sector to 27 per cent of the total value added in FY48.
Similarly, services, its share in the terminal year will increase from 53 percent to 55 percent. The contribution of exports to GDP should be increased and the rate of investment should be increased. To achieve this, both the government and the industry must be equal partners, the CII president said.