Addressing a press confence ICICI Bank chairman K V Kamath, who was elected the new president of CII on Wednesday, 30 April, said that despite the global slowdown and strong challenges in the domestic economy, there was enough momentum and fundamental macro-economic strength in the Indian economy to "give us a good year"

Saying CII was optimistic about the near term economic future and felt that an aspirational 10 per cent GDP  growth rate was possible in the medium term, Kamath also said that inflation was the biggest challenge facing the country today. Inflation needs to be dealt with by the government, however, the government would have the support of industry and CII in this effort said Kamath. CII will work with its membership to try and ensure that manufacturing WPI comes down to below 5.5 per cent.

Outlining the challenges facing the economy today, the CII president listed the the rising energy costs, commodity and consumer prices; pressure on balance of payments; Increasing supply constraints; widening infrastructure gap; equitable growth and stagnating agriculture production and productivity.

Each of these challenges needed careful addressing, Kamath said. While the situation on inflation does not make it possible at present to consider a greater pass through of oil prices, this is a measure which would have to be taken some time in the near future, depending on how the inflationary situation may then be, he said.

The oil prices situation also mandates that the country set a target for itself in terms of conservation. Demand management of energy consumption including greater efficiency in utilisation is a must for the country, he added.

Kamath said that in the current situation of a global slowdown and loss of growth impetus from the external environment, the growth stimulus has to come from within. In this context, keeping in mind that the Indian economy was investment-led, it was imperative that infrastructure received a huge dose of public spending.

This has to be complemented by an increase in the shelf of bankable projects for PPP projects to take off. The country needs around $600 billion of investments in infrastructure between now and 2015, said Kamath. Besides being the greatest bottleneck to India's growth, the sector also has the greatest capacity to absorb huge investments and thereby keep the economy moving at a fast clip, said Mr Kamath.

Drawing attention to the episodic problem of foodgrain shortfall and the consequent rise in prices, the new CII president said that the agriculture sector was in urgent need of reforms. Be it the need of a model land leasing act or greater private sector involvement in agriculture, or large public investments in creating agricultural infrastructure, enablers are required urgently.

With more than half the population of the country deriving their livelihood from this sector, there was a potential for this crisis to reach acute proportions he warned. As a shrinking contributor to the national income with low GDP growth, this sector was getting more and more marginalised, while the opportunity for alternative employment for the population dependent on this sector is not emerging fast enough.

Similar attention was required by the manufacturing sector, he said. In the last four years there have been great success stories coming out of this sector, and many Indian companies are emerging as global leaders. But the concern lies elsewhere. In 1991, when the economy started opening up the share of manufacturing in India's GDP was 17 per cent, which had come down to 15 per cent during 17 years of reforms.

This indicates that successes at the level of individual companies had not been emulated by the sector as a whole, which Kamath warned, did not augur well for the Indian economy, as the sector  was a key employment generator. He said tha CII has a set a target for the sector to represent 25 per cent of GDP by 2020, added the CII President. This would entail an enabling policy environment, including a friendly labour policy, which required political concensus and will.