CII President Forecasts Robust GDP Growth of 6.7% as Private Sector Investments Soar.
According to R Dinesh, the newly-appointed President of the Confederation of Indian Industry (CII), there has been an increase in capacity utilization across industries in India. He stated that sectors such as cement, steel, and machinery are experiencing utilization rates of over 80 percent, indicating the need for capital formation and fresh investment. Dinesh mentioned that businesses typically add capacity when utilization rates cross the 75 percent threshold.
Regarding private investment, Dinesh expressed confidence, stating that all indicators suggest that private sector capital expenditure (capex) is already taking place. He cited examples from the services sector, such as hotels and airlines, which are operating at utilization rates of 90-95 percent. This, according to him, demonstrates that private sector capex has rebounded.
Dinesh referred to data from the Centre for Monitoring Indian Economy (CMIE), which reported capex commitments of Rs 14.7 lakh crore in the financial year 2021-2022 and Rs 25.7 lakh crore in the financial year 2022-2023. These figures indicate a significant increase in capex commitments.
Private sector investment has been relatively slow in India, despite measures taken to boost it, such as the reduction of corporate tax rates to 25 percent for companies with profits less than Rs 400 crore per annum and the implementation of Production Linked Incentives (PLIs). These measures were intended to encourage capital expenditure and support the overall growth of the Indian economy