Growth not secular yet, says CII Chief

‘Rural, lower income household consumption seeing slower recovery; time to pause rate hikes’

India’s post-pandemic growth trajectory is still fragile and unequal, with rural and lower income segments of the population seeing a slower recovery that could deter a fledgling revival in private investments, the Confederation of Indian Industry (CII) president Sanjiv Bajaj said on Monday, mooting an urgent pause in interest rate hikes.   

Consumption trends, as indicated by recent industrial output data, are “clearly unequal”, Mr. Bajaj told  The Hindu. “We see strong sustained growth from the middle and upper middle class, but in lower income segments, which is the mass volume, we still see lower growth. Rural India is growing slower than urban India,” he noted. 

“So we are still not in a situation of secular growth. That fragility exists. At the same time, we clearly see the green shoots for new investment coming in several sectors in the third quarter of the year already, like steel electronics, chemicals… But to see this across sectors, you have to see consistent demand on the ground and steady growth,” the CII chief averred.   

Terming interest rates as the single biggest variable at this point, Mr. Bajaj said if they go up further, it would be a dampener for growth. 

“The time has now come for India to decouple itself on rates from the rest of the world. The coupling was required through the pandemic, we had a common challenge and required common, coordinated action,” he stressed, adding that now policy makers can revert to pre -COVID actions and focus on growth, as inflation is moderating.