Hyderabad, Jul 16: India's economy can grow over eight to 8.5 per cent, overcoming major challenges, including globally-driven double digit inflation, Confederation of Indian Industry President and ICICI Bank Managing Director K V Kamath said today.
Addressing a press conference here, he said certainly, high inflation is pinching, with crude oil price touching USD 140 plus per barrel. ''However, I don't expect any slow down in economic growth as the major investment driver is the Indian Industry itself. The envisaged USD 700 million industrial investments are hard projects and not those in the back burner.'' ''Unlike in the past, over 70 per cent of the large projects are now funded by cash accruals by companies. Corporates can invest themselves and grow rather than depend on borrowings now,'' he said, He ruled out high interest rate affecting corporate growth in the near future. ''Corporate profitability has not dropped,'' he said.
The corporate sector registered a robust top line growth at 18 per cent and bottomline growth at 26 per cent in 2007-08, creating room for Capex in 2008, he said, adding the Services sector would register a growth rate of 10 per cent.
''India is not a large borrower. Fifteen billion USD borrowings for a country with a trillion USD GDP are not much,'' he added.
Replying to a question, he asserted that political uncertainty or political alignment and realignment would not affect economic growth. Populist measures to alleviate poverty could be taken up so long as the States balance their ''books of accounts''.
He noted with satisfaction the country having a strong savings rate of 34.8 per cent, investment rate of 35.9 per cent and incremental capital-output ratio (ICOR) of four per cent, better than China(4.3 per cent) and Brazil (5.1 per cent). The country had a strong domestic consumption of 6.7 per cent of GDP in 2007-08 and strong 20 per cent growth in export and foreign exchange reserves at USD 312 billion, he observed.
He expected the Reserve Bank of India to take ''conservative'' measures in its credit policy later this month to check the high inflation without affecting industry gorwth. The Indian banking system was in good stead now, with cleaning up of Non-Performing Assets (NPAs) in the last ten years.
Setting economic aspirations for medium term, he said the country need to double per capita income in ten years by aspiring for a ten per cent GDP growth. Manufacturing share in growth should be increased to 25 per cent by 2020.
Outlining the development agenda for medium term, he said the country should provide better access to health, education and skills for its people, make housing affordable and develop model cities to accommodate future urban migration.
He said the CII was deepening engagement with Brazil for cooperation in agriculture, with Russia in energy and with China to build on complementary strengths in various fields. It was imperative to step up cooperation with South Asian and South East Asian countries.
By 2022, India could be the World's largest pool of trained manpower, leaders in industry and commerce, accounting for 10 per cent of world trade and a source of global innovations, he envisaged.