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India’s economy is expected to grow 6.4-6.7 per cent during the current financial year driven by strong domestic demand, even as geopolitical uncertainty poses downside risks, the newly appointed CII president Rajiv Memani said on Thursday.
Photograph: Anushree Fadnavis/Reuters
Addressing his first press conference after taking over as the CII President, Memani made a strong case for simple three-tiered GST rate structure, with essential items attracting 5 per cent, luxury and sin goods at 28 per cent, and the remaining items in the 12-18 per cent bracket.
Currently, goods and services tax (GST) is a four-tier tax structure with slabs at 5, 12, 18 and 28 per cent. Luxury and demerit goods are taxed at the highest bracket of 28 per cent, while packed food and essential items are in the lowest 5 per cent slab.
On India’s GDP growth, he said factors, including a good monsoon forecast, and enhanced liquidity emanating from the Reserve Bank’s cash reserve ratio (CRR) cut, and interest rate reduction will support the country’s economic growth.
“We expect (economic growth in) a range of 6.4-6.7 per cent,” Memani said in response to a question on CII’s gross domestic growth (GDP) forecast for India during 2025-26.
Observing that there are some obvious risks, he said, “A lot of these relate to external trade risk. I think a lot of them have been factored in, and also there are some upside.
“So hopefully they should get balanced out… From a CII standpoint, we’re looking at 6.4-6.7 per cent growth.”
In a presentation, Memani said risks to growth are evenly balanced, and “geopolitical uncertainty” poses downside risks whereas “strong domestic demand” is an upside.
The Reserve Bank forecast the economy to grow 6.5 per cent during the 2025-26 financial year.
Last month, the central bank announced slashing CRR by 100 basis points, which will unlock Rs 2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy.
Benchmark interest rate was cut 50 basis points to 5.5 per cent.
To a query related to goods and services tax (GST), he emphasised on the need for rate rationalisation.
“Under GST 2.0, we have called for rate rationalisation, especially on products that are consumed by lower income segments. Several products taxed at 28 per cent, including cement, should also be reduced… we believe this will boost economic activity,” Memani said.
He also batted for procedural simplification of GST framework and advocated for the need to build a national consensus on inclusion petroleum, electricity, real estate and potable alcohol in GST.
He further said if India has to capitalise on the prevailing opportunities, “it will need to undertake more economic reforms, win the AI race and possible impact on jobs, grow high-end and employment intensive manufacturing and continuing focus on Ease of Doing Business”.
The presentation emphasised that amid global flux, India continues to lead as the world’s fastest-growing major economy.
In support, he highlighted low inflation, fall in G-sec yields, significant foreign exchange reserves, rising private investments, and country’s current account status, among others.
