A day after the met department said there is zero possibility of a deficient monsoon this year, industry body CII today said normal rainfall will far outweigh the concerns of slight rise in oil prices.
Terming the 7.6 per cent GDP growth of 2015-16 as “very real”, Naushad Forbes, president of the Confederation of Indian Industry (CII), said there has been significant growth pick-up on account of investment in the infrastructure sector and the government’s reform push.
“We have benefited greatly from the fall in oil prices in last year and half. Every indication is that prices will firm up but they will not rise dramatically during the course of this year.
“The effect of a positive or normal monsoon will be very beneficial for the economy and far outweigh the concerns of a slight strengthening in oil price,” he told PTI here.
Oil prices last week touched $ 50 per barrel, raising concern of its spiralling impact on inflation and growth.
He said the benefit of normal monsoon shows up in agriculture growth and leads to rise of demand in the economy.
Asked how real was the strong GDP numbers released this week, he said, “Well the numbers are very real, we have seen growth picking up significantly. It has been on the back of significant infrastructure investment by the government and reform push.”
The CII president said the manufacturing growth within the GDP growth numbers is “not great but okay at around 5-6 per cent.”
“Manufacturing growth in IIP number is much worse running at around 2 per cent. The reason for that is because of the difference between measuring output and measuring value added. As commodity prices have weakened, it shows in higher value added and higher growth GDP. The manufacturing numbers are real,” he said.
Stating that private investment in manufacturing has not picked up well, he said it was a matter of cycle turning. “In last 6 months more and more sectors are reporting an uptick in demand and…. we will see the investment cycle turning also.”
On reforms, Forbes said for many years now India is completely open across the manufacturing sector for FDI.
With the exception of defence, which is also being opened up, the areas that still carry restrictions on FDI are in a few services sector.
“There are FDI caps in areas like insurance. There are some caps in sectors like telecom and airline. There are restrictions on FDI in service sector like legal profession. These are all the sectors that one should be looking at opening up as we go along in a progressive manner,” he said.