Friday, May 23, 2008

India to grow at 8.6% for next 5 years - says CII president

MUMBAI: Stating that India is not witnessing a slowdown in investment, Confederation of Indian Industry (CII) President K V Kamath said on Thursday the country would continue to grow at a healthy rate of 8.6 per cent for the next five years.

"Personally, I think India would continue to grow at 10 per cent. But going by CII figures, India's growth rate would be 8.3 per cent to 8.6 per cent in the next five years," he told reporters here.

Kamath, who heads India's second largest lender, ICICI Bank, said the economic fundamentals of the country are strong.

"Our savings rate is 35 per cent and our investment rate is 36 per cent."

He said there is no slowdown in investment in the country, one of the fastest-growing major economies which is currently focusing on controlling soaring inflation that has hit a four-year high.

"About USD 700 billion is being invested in the country," Kamath pointed out.

But there are two factors that worry the new CII President: rising inflation and power crunch.

"Inflation at 4 per cent is not acceptable. Inflation over 4 per cent is dangerous," Kamath said.

India's inflation has crossed 7 per cent, according to the latest government data. "We won't be comfortable with 7 per cent."

On power shortage, he said, "We are lagging behind... it could be upset the growth momentum."

Many states, including Maharashtra - the country's top industrialised state - are face electricity problems. On the tightening of monetary policy by the RBI last month, Kamath said his bank is in a comfortable situation in terms of liquidity.

"Our credit offtake is not matching liquidity inflows. To me that is a key signal of whether rates will go up or not." Both China and India would set the agenda for global growth for the next few years, he predicted.

So, CII plans to open offices in China and Africa where it expects growth to start in the next five years. For the last 20 years, China has made news for its growth. Now for the next 20 years, India would make news for its growth, Kamath said.

"Four (CII) offices would be set up in Africa. We plan to access Africa in a bigger way," he said.