FICCI President Sanjiv Mehta on the path to economic recovery

Q:1 You have taken the charge of the FICCI President at a time when the worst is still not over. What would you recommend the government to expedite the economic recovery?
Ans:        
>Fiscal year likely to end with GDP growth of above 9%
>Green shoots – speed of vaccination, impressive tax collection, robust FDI, merchandise exports and good agri-production 
>Expectations – Sustained growth rate of above 8%, inclusive growth and a virtuous economic cycle 
>Private consumption is not up to the mark yet
>Private investment cycle yet to kick in
>Capacity utilisation is not up to the mark
 

Q:2  You talked about continuing muted private consumptions. In that context, what will you recommend the Finance Minister? Is there a case for increasing the income tax threshold?
Ans:
>Government spending should not stop
>Support service sector and MSMEs
>Private spending will restart virtuous economic cycle 
 

Q:3 So, what is it that is not letting private sector to invest, now that the economy is on a recovery mode?
Ans:
>Capacity utilisation in India is still in the 60s and 70s 
>Banking sector is in a strong base and has the strength to lend
>Bank lending will go up when capacity utilisation goes up
>Risk-taking capacity of Indian businesses has not gone away
 
 
Q:4 Companies are facing high input prices and passing it on to consumers. How do you see going forward – will companies continue to pass increasing input prices to consumers and how do you see the inflation trajectory?
Ans:
>Unprecedented inflation in some commodities
>Prices of tea, palm oil, crude oil and derivatives went up significantly
>No correlation between input price inflation and price of finished products
>Consumers look at price value – which is linked to product superiority, relative price index etc
>Companies should keep consumer franchise intact and retain market share  

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