India will witness strong economic growth in the coming year, despite external vulnerabilities arising from rising oil prices, the US-China trade war and America's monetary tightening, the Confederation of Indian Industry (CII) said on Sunday.
Commenting on the country's growth outlook for 2019, the industry body said its optimism is buttressed by strong drivers emanating from the services sector, infrastructure structure including construction equipment and better demand conditions arising out of spending occasioned by the general elections due in early 2019.
"Better demand conditions, settled GST implementation, capacity expansion from growing investments in infrastructure, continuing positive effects of reform policies and improved credit offtake especially in the services sector at 24 per cent will sustain the robust GDP growth in the range of 7.5 per cent in 2019," CII Director General Chandrajit Banerjee said in a statement.
"The positive outlook is buttressed by strong drivers emanating from the services sector, infrastructure structure including construction equipment and better demand conditions arising out of election spending," CII said.
According to the chamber, among the key drivers for growth that need to be fostered include extending the Goods and Services Tax (GST) to currently exempted sectors such as fuel, real estate, electricity and alcohol.
Noting that credit flow to industry grew by only 2.3 per cent in the first half of the current fiscal, CII said credit availability has been a challenge, particularly for the micro, small and medium enterprises.
"CII submits that the RBI should introduce measures such as revisiting lending restrictions of PCA (Prompt Corrective Action) banks, opening of a limited special liquidity window to meet emergencies of financial institutions, including mutual funds, besides others to improve liquidity in the system," it said.
The government should consider setting up additional benches of the National Company Law Tribunal to strengthen the judicial infrastructure for easier and faster insolvency resolution, it said.
CII also emphasised the need to persuade states to implement the Agriculture Produce and Livestock Marketing Model Act, which has been implemented by only four states, in order to strengthen agriculture produce marketing.
On the critical energy sector, the industry body suggested that India needs to increase domestic production of oil, providing a special window for state-run oil marketing companies to procure fuel and step up diplomacy with the US to continue to secure purchases of crude from under-sanctions Iran.