New Delhi, May 6 (KNN) A prolonged conflict in West Asia, leading to shipping disruptions and higher energy prices, could significantly impact India’s economic growth and potentially pull GDP expansion below 6.5 per cent, according to Confederation of Indian Industry (CII) President Rajiv Memani.
He noted that the ongoing energy crisis stemming from the West Asia conflict could pose the “biggest risk” to global economic growth, including India’s, if it persists over an extended period.
Growth Outlook Hinges on Crisis Duration
Speaking to PTI, Memani said, “If it (West Asia crisis) does settle on time, then I think, you know, the growth momentum should pick up. You know, we should be somewhere between 6.5 to 7 per cent. If it extends for a very, very long time, then, you know, maybe slower than 6.5 per cent.”
He added that the uncertainty makes it difficult to provide a clear outlook on growth and interest rates until the situation stabilises.
Crude Oil Price Concerns
Highlighting the impact of oil prices, Memani noted, “There is enough evidence of different price points and different impacts on India’s growth. I think by and large, over the last 10-12 years, except for some phases in between, oil prices have been benign, and I think that’s also helped India to achieve strong growth,” as quoted by PTI.
The CII President emphasised, “Anything above USD 100 per barrel will have an impact on growth, given that we’ve still not reached a point where we are sufficiently changing our demand pattern.”
MSME Support
On monetary policy, Memani highlighted that interest rates are unlikely to decline in the near term, and called for targeted government support to shield micro, small and medium enterprises (MSMEs) from the impact of the West Asia crisis.
“So I would say I’m much more in favour of targeted measures, particularly those measures which can address the causes of the MSMEs because of issues around credit,” he underscored.
Focus on Structural Reforms
Memani also stressed the need to accelerate reforms related to ease of doing business, decriminalisation of regulations, and judicial efficiency. While acknowledging progress in recent years, he flagged dispute resolution delays as a major concern for industry.
“We have to find a way to reduce the number of disputes. Secondly, if there is a dispute, there is a faster way of resolving that. So, whatever the alternative ways of resolution are, CII has given a lot of recommendations on that,” the CII President said.
(KNN Bureau)
