Situation is ripe for a rate cut: Ficci chief

NEW DELHI: While asserting that Indian macroeconomic fundamentals are strong and tax cuts will help boost private sector investment, Anant Goenka, the newly elected Ficci president and vice-chairman of the RPG Group, on Tuesday suggested that the Reserve Bank of India should lower interest rates.

“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 said. Goenka mentioned that there was not much risk to Indian businesses as inflation was under control, the fiscal parameters were healthy, bank and corporate balance sheets were clean and the economy was growing fast. “Macro risks are minimal… The only stress point was the US trade agreement, but should be resolved soon, as both sides have indicated.”

Goenka noted that the impact of US tariffs on Indian businesses was confined to a few sectors such as gems and jewellery, garments, and shrimp. “Diversification to other geographies helped, FTAs may have played a part, and general industry outreach also helped. In fact, the newer FTAs are seeing very good utilisation,” he said.

When asked about private investment, he said, a pickup was expected soon as capacity utilisation is improving. “There were some challenges on demand for a few years like high debt, Covid drying up demand, inflationary pressures, and global shocks. But things now look far more stable. With income-tax and GST changes putting nearly Rs 2.5 lakh crore into consumers’ hands, we’ve seen demand pick up strongly since Oct, which should largely sustain.”

While promising to work with govt for smooth implementation of the labour codes, Goenka suggested that there was a need to work on easier rules for land acquisition, cheaper power, and uniformity in rules across states.

In the Budget, he said, govt should focus on further indigenisation of defence production, a 30% increase in defence capex, along with a dedicated Rs 10,000-crore allocation for DRDO. A mega electronics and IT park that clusters OEMs and assemblers in a plug-and-play ecosystem and the inclusion of tailings (industrial waste) from mining under the Critical Minerals Mission were the other items on his budget wish list.

“Exports should be an area of focus,” Goenka said regarding Ficci’s budget recommendations. “RoDTEP outlay can be on the higher side. Rs 18,000 crore was allocated, but we feel more can be done there, as done with the exports promotion mission.”

Goenka also stated that a core focus area for Ficci would be to increase manufacturing from 15% of GDP to 25%, which will require the industry to push harder on R&D, quality, sustainability, women’s participation, and MSME capability, as well as leveraging FTAs to make the industry more resilient in a changing global scenario. “We are not asking the govt to do everything… Indian industry has to up our game further. And I think on trade, particularly a global push by Indian companies is important. I think we need to be much more global in our outlook as an industry rather than focusing just on India,” he said.

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