Political uncertainty will not impact growth: Kamath

July 16th, 2008 - 6:44 pm ICT by IANS  

Hyderabad, July 16 (IANS) The current political uncertainty would have no impact on the economy, said Confederation of Indian Industry (CII) president K.V. Kamath Wednesday, adding optimistically that the Indian economy would continue to grow between 8.5 and 9 percent thanks to the strong fundamentals and $700 billion investment pipeline. He believes that the country has learnt to move forward irrespective of the political alliance in power.

“If you look back at 12 years, this country has grown on a path which is consistent, which is forward, whatever be the political alignment. I am sure the country now has come to a level where the politics will go along with the business in terms of growth path,” he said to a query at a news conference here.

Kamath, who is here to attend the meeting of CII’s national council, said the global economic upheaval would have no impact on India’s economic growth but cautioned against the rising inflation. It could cut into corporate profitability and hit the investment pipeline, he said.

Describing inflation as the biggest risk, the CII president called for balancing inflation versus growth. “We can’t afford a double whammy. Inflation is punching this country. We can’t allow the growth to get distorted by the inflation,” he said.

“I can’t say if the inflation will increase or decrease,” he said and hoped that the monitoring authorities would come out with appropriate steps conducive to control inflation.

He believed that the global economic upheaval and the credit turmoil would have no impact on the growth of the Indian economy.

He disagreed that the global trend could impact the investment pipeline in India saying it was not depending on foreign investment. He pointed out that 70 percent of the investment came from Indian corporates.

“Unlike in the past, a large part of the projects are funded by Indian corporates. Despite challenges during last two to three quarters, the investment pipeline was not affected.

“This investment is from their internal cash accruals and profits,” he said.

Pointing out that half of the investment pipeline is in infrastructure, he hoped that the investment would happen in two to four years. “These projects get done in three years or less. Manufacturing projects in 18 months and infrastructure projects in two and half to four years,” he said.

The CII chief believes that India would continue to be growth horizon for next two decades. “India has become a growth horizon starting from 2000-2002 and has just started. I would believe India’s time will be next 15 to 20 years,” he said.

He underlined the need for India to engage with Brazil, Russia and China. He also called for engaging with Africa saying it would be the next growth horizon.

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