In a significant push for monetary policy easing, the newly elected president of the Federation of Indian Chambers of Commerce and Industry (Ficci), Anant Goenka, has publicly called for the Reserve Bank of India (RBI) to lower interest rates. Speaking on Tuesday, the vice-chairman of the RPG Group expressed confidence in India's robust macroeconomic fundamentals, stating that the conditions are ideal for a rate reduction to fuel private sector investment and growth.
The Case for Monetary Policy Easing
Goenka asserted that with inflation performing better than anticipated, the central bank has room to act. "The situation is ripe for a rate cut. Inflation was better than expected. RBI should continue its momentum on rate cutting and pushing towards growth," he emphasized. He downplayed major risks to Indian businesses, highlighting that inflation is under control, fiscal parameters are healthy, and both bank and corporate balance sheets are in good shape amidst fast economic expansion.
He acknowledged that the US trade agreement posed a potential stress point but expressed optimism about its swift resolution, given positive indications from both sides. The impact of US tariffs, he noted, remains limited to specific sectors like gems and jewellery, garments, and shrimp, with diversification and Free Trade Agreements (FTAs) helping to mitigate the effects.
Private Investment and Demand Revival
When questioned about the pace of private capital expenditure, Goenka forecasted an imminent pickup, driven by improving capacity utilization across industries. He reflected on past challenges, including high debt, the demand shock from Covid-19, inflationary pressures, and global disruptions, but affirmed that the landscape now appears "far more stable."
A key driver for this optimism is the significant disposable income boost to consumers. Goenka pointed out that recent income-tax and GST changes have put nearly Rs 2.5 lakh crore into consumers' hands. This infusion, he observed, has triggered a strong demand recovery since October, which is expected to be largely sustainable.
Policy Priorities and Budget Wishlist
Beyond monetary policy, Goenka outlined several areas requiring government attention to sustain the growth momentum. While pledging Ficci's collaboration for the smooth implementation of new labour codes, he stressed the need for easier land acquisition rules, cheaper power, and greater uniformity in regulations across different states.
For the upcoming Union Budget, Goenka presented a focused set of recommendations:
- Defence Indigenisation: A push for further indigenisation in defence production, coupled with a 30% increase in defence capital expenditure and a dedicated Rs 10,000-crore allocation for DRDO.
- Export Boost: Enhancing the outlay for the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme beyond the current Rs 18,000 crore.
- Industrial Clusters: Creating a mega electronics and IT park with a plug-and-play ecosystem for OEMs and assemblers.
- Critical Minerals: Including mining tailings (industrial waste) under the Critical Minerals Mission.
A Vision for Resilient Manufacturing
Outlining a core agenda for his tenure at Ficci, Goenka stated that a primary focus would be to elevate manufacturing's contribution to GDP from 15% to 25%. Achieving this ambitious goal, he clarified, requires a concerted effort from industry itself, not just government support.
"We are not asking the govt to do everything… Indian industry has to up our game further," he remarked. He called for greater emphasis on research & development, quality, sustainability, women's participation, and enhancing MSME capabilities. Leveraging FTAs and adopting a more global outlook are also crucial for building resilience in a changing world order. "I think we need to be much more global in our outlook as an industry rather than focusing just on India," Goenka concluded, signaling a forward-looking strategy for Indian businesses.
