China factor delaying Pvt investments: Sanjiv Puri

China's surplus capacity is dampening Indian business spirit for adding further production capacity, according to Sanjiv Puri, president of Confederation of Indian Industry (CII). The industry body expects GDP growth of 6.4-6.7% this fiscal, slower than the 8.2% growth seen in FY24 as pent-up demand from the pandemic years subsides and the economy expands at a rate closer to its long-term potential.

- Gireesh Chandra Prasad

China's surplus capacity is dampening Indian business spirit for adding further production capacity, according to Sanjiv Puri, president of Confederation of Indian Industry (CII). The industry body expects GDP growth of 6.4-6.7% this fiscal, slower than the 8.2% growth seen in FY24 as pent-up demand from the pandemic years subsides and the economy expands at a rate closer to its long-term potential. Businesses are betting on a revival in government's capital expenditure in the second half, a possible rate cut by the RBI and a pick up in rural demand due to good monsoon showers. But there are headwinds to growth and the government should continue investing in infrastructure, use proceeds of divestment in state-run companies to set up a sovereign investment fund to acquire strategic assets globally, and target subsidies by expanding direct transfer of social benefits, Puri, who is also chairman and managing director of ITC Ltd, said in an interview. Edited excerpts:

Last June, you had mentioned that factories are putting to use more than 75% of their capacity, a sweet spot for further investments. Yet, the first advance estimate for FY25 GDP shows growth in investments in plant and machinery going south to 6.4% from 9% a year ago.

If you look at the larger picture, the Indian economy is able to achieve the kind of numbers that are forecast despite all the challenges that we see around us, and China dumping stock all over. Secondly, economic growth rate in the first half was only 6%; so, it is going to be higher in the second half, which is a positive movement.