A prolonged West Asia conflict characterized by significant shipping disruptions and elevated energy prices poses a serious threat to India's economic growth momentum and may pull down the country's GDP growth to less than 6.5 per cent, CII President Rajiv Memani said on Tuesday.
According to Memani, the prevailing energy crisis due to the West Asia conflict poses the "biggest risk" to global economic growth -- including India's -- if it drags on for a long time.
"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," the CII President told PTI in an interview.
However, he acknowledged that it is difficult to form a concrete view on GDP growth and interest rates until the West Asia crisis settles down.
On elevated crude oil prices and their impact on the Indian economy, the CII President said, "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".
He observed that "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".
India's real gross domestic product (GDP) is estimated to grow by 7.6 per cent (year-on-year) during 2025-26, as per the Second Advance Estimates (SAE) of the new GDP series (base year 2022-23).
Besides, Memani opined that interest rates are "definitely" not coming down soon, when asked about the outlook regarding the Reserve Bank of India's monetary policy stance, and pitched for targeted relief measures by the government to cushion 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 suggested.
On April 8, the central bank's six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate unchanged at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows.
The CII President further emphasised the need to move faster on ease of doing business, decriminalisation and judicial reforms, while acknowledging that the government has done a commendable job on these over the last 12-18 months. He flagged issues around dispute resolution as a key challenge faced by the 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," Memani said.