INDIA’S top business body insisted yesterday the economy was in strong shape to ride out the global financial storm but conceded corporate confidence was a big problem.
The feeling for companies is ‘like they have suddenly fallen off a cliff’, KV Kamath, president of the Confederation of Indian Industry (CII), said at the opening of the annual India World Economic Forum in New Delhi.
The meeting, which has drawn 700 delegates hoping to sniff out opportunities in one of the world’s fastest-growing economies, is taking place against the backdrop of a financial crisis that has blunted India’s growth prospects.
Last year, a gold rush buzz was tangible at the forum with India’s economy expanding by a scorching nine per cent.
But this time, with growth seen at seven percent or lower for the current fiscal year to March, organisers say the mood at the three-day event, hosted by the CII in partnership with the World Economic Forum, is more muted.
“The fundamentals of the economy are sound,” said Kamath, who is also chief executive officer of India’s largest private sector bank ICICI.
“The challenge we have is in keeping confidence going when globally the situation is looking dark,” said Kamath, noting the global economic environment has deteriorated so rapidly that companies need time to take stock.
Still, speakers at the forum said the seven percent growth expected for India this year and six per cent next year was enviable compared to recessionary trends in the West.
“I’m hearing concern expressed here about six percent growth – in the West that growth would be considered quite fantastic,” said James Quigley, chief executive of US-based accounting giant Deloitte.
Speakers noted India’s vast domestic market of 1.1 billion people would be a key driver of expansion in coming months with exports accounting for just 15 per cent of GDP.
With India’s inflation falling from 13-year peaks to single digits of close to nine percent, Kamath added the central bank could now move more aggressively to cut interest rates to boost corporate confidence and spur growth
