According to Sanjiv Bajaj, the incoming president of the Confederation of Indian Industries and chairman of Bajaj Finserv, India’s FY23 gross domestic product is predicted to expand between 7.4 and 8.2% under three scenarios of world crude oil prices.
Bajaj also stated during a press conference that the government needs to significantly expand its spending on education and health care and that inter-state committees similar to the GST Council should be considered for sectors including power, land, labour, and agriculture.
According to Bajaj, CII anticipates 7.4% GDP growth in FY23 assuming global petroleum prices average $110 per barrel, which is a pessimistic scenario. GDP growth could be 7.8% in a business-as-usual scenario with crude prices averaging $100 a barrel, and 8.2% in an optimistic scenario with $90 a barrel. Bajaj expressed optimism that GDP growth would be closer to the optimistic forecast.
On Monday, benchmark crude oil prices were trading at around $109 per barrel, despite Russian forces suffering a serious setback owing to fierce Ukrainian opposition and continued Covid-19 lockdowns in China.
“The outlook critically hinges on the trajectory of global crude oil prices. Global headwinds and inflation will have to be countered with robust policy reforms, both domestic and external sector reforms, to unlock the growth potential of the economy,” Bajaj explained.
“Tailwinds that are supportive of growth in the short term include government CAPEX, private sector investment, which is showing an uptick aided by strong demand in some sectors, and the PLI push in others, good agriculture season on the back of the expectations of a good monsoon and positive export momentum,” he stated.
Bajaj believes that the central and state governments should further reduce taxes on gasoline and fuel to combat inflationary pressures. By 2025, he believes the government should increase public health spending from 1.3 per cent of GDP to 2.5-3 per cent, and public education spending from 4.4 per cent to 6 per cent.
More sectors should be brought under the production-linked incentive (PLI) schemes, according to Bajaj, particularly those that are labour intensive, such as leather, footwear, toys, and sectors with substantial imports.
He went on to say that employment-linked incentive programmes should be implemented in chosen service sectors with significant development potential, the ability to generate jobs and earn foreign exchange, such as tourism, leisure, retail, animation, and gaming. He also advocated for decriminalising various business-related laws and clearing the court system.
