“We believe that the strategy on public capex is important because it enhances the competitiveness of the economy, and it also provides impetus to the economy. It has its own economic multipliers,” Puri told ET in an interview. He also said that the CII is “cognizant that the fiscal path is critical, so we are recommending that the fiscal path be followed, but not be compressed any further, because that will dampen investments,” he said.
The industry body has suggested a 25% increase in the Centre’s capex in the budget for the 2025-26 financial year (FY26) from ₹11.11 lakh crore pegged for FY25.
Puri, who is the chairman and managing director of ITC Ltd, said the projected four-year low 6.4% gross domestic product (GDP) growth for FY25 in the first advance estimates released on Tuesday is a “decent” number. “The GDP numbers need to be looked at in the context of the situation across the world,” he said.
CII expects the economic growth to bounce back to 7% in FY26.Asked about the view that India Inc was not coming forward to invest or support demand with enhanced employee compensation or by reducing prices, Puri said the industry is facing headwinds. “If you look at our internal CII surveys, 35% say that they will be investing more this year, 45% say next year. These are indicators that the private investment is on the right track, but it also has certain headwinds and certain monitorables,” he said.
On wages, Puri emphasised that they are revised at both the factory and managerial levels. “Companies know very well that they will not be able to retain talent if the wages are not aligned with market trends,” he said, adding that the larger question to be addressed is how to create more jobs and better quality of jobs.
It is important to note that consumption is the largest contributor to GDP, he added. “Private investments have a role, but it’s not the sole driver of economic transformation,” Puri said.
Improved government spending, better monsoon, and moderating inflation could benefit urban areas, leading to gradual improvement in urban consumption, he said.
Budget Suggestions
On agriculture, Puri highlighted that there is an opportunity to develop climate-controlled infrastructure around urban clusters, which can be given to small farmers and improve supply chains.
CII has also recommended increasing farm incomes and wages under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA).
Since economic activity is dependent on nature, it has called for a National Commission on Adaptation and Agriculture resilience, and a National Mission on Water Security. “We need a larger public and private collaboration to take it to scale, that can have impact at the national level,” Puri said.
Additionally, CII is advocating for rural industrial hubs, with first and last-mile connectivity, to boost industrialisation in these areas.
Content Source: economictimes.indiatimes.com