Monday, July 16, 2007

CII expects Indian economy to expand at slower rate this fiscal

by Vipin Agnihotri

If the Confederation of Indian Industry (CII) is to be believed, India will see an economic growth of 9.2 per cent in this fiscal year, which is only marginally down from 9.4 per cent last year with the services sector and industry ruling the roost.

According to CII, the agriculture sector will clock a moderate 3 per cent growth against 2.7 per cent in 2006-07. On the other hand, industry and the services sector are expected to grow at 9.4 per cent and 11.2 per cent respectively during 2007-08.

I completely agree with CII prediction of a lower growth of 9.2 per cent in 2007-08 because of the factors like global slowdown, inflation, falling demand as a consequence to increasing interest rates, appreciating rupee and of course poor infrastructure.

The pivotal factor here is that in spite of the appreciating rupee having a bearing on exports, the India’s GDP grew at 9.1 per cent, led by a 19.35 per cent growth in corporate earnings. Few of the experts are of the opinion that the rising rupee had a negative impact on textile and leather sectors during the fourth quarter.

The CII also recommended the Indian government to reshuffle domestic pricing policy of number of crops. It has come into the notice that farmers are switching from oilseeds to more lucrative alternatives such as wheat and gram. All these predictions of CII is based on the assumption that the central bank would ease hiking the interest rate.

 

 

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