New Delhi, Nov. 9: The Confederation of Indian Industry (CII) has predicted gross domestic product (GDP) growth at 7.2 per cent for 2003-04.
The industry association’s earlier growth forecast had been in the 6.5-6.8 per cent range. “The upward revision is due to an excellent monsoon, higher expected foodgrain output and agricultural income, and a significantly better performance of the industrial, manufacturing and services sector,” CII chief economist Omkar Goswami said.
Against the backdrop of a good monsoon, CII feels that the agricultural growth can exceed 8 per cent. Agriculture and allied activities account for around 24 per cent of GDP.
On the other hand, the industrial sector, accounting for nearly 26 per cent of GDP, is expected to grow at 6.3 per cent in 2003-04. “Order books of companies in the manufacturing sector are fuller than they have been in the past four years,” said Goswami.
The services sector, which accounts for half of the country’s GDP at present, is expected to grow 7.5 per cent. “For the last ten years, in good as well as bad, the services sector has registered growth in excess of 7 per cent and has often crossed 8 per cent,” the chamber said.
CII also predicts that if this buoyancy in growth pattern continues for the next two quarters, then “India will see a much-needed investment cycle”.
According to CII, there is a sharp increase in trade balance. It was $6 billion in April-August 2003 compared with $2.7 billion last year. Also, the Reserve Bank of India has taken some serious steps in the recent past to curb currency appreciation. RBI reduced the ceiling on non-resident rupee deposits to Libor+100 basis points from Libor+250 basis points. Earlier, it had also cut the repo rate by 50 basis points to 4.5 per cent, indicating its support for a softer interest rate regime.
However, the chamber points out a poor growth in credit offtake. Bank credit has increased by Rs 6,000 crore only in April-September 2003 compared with an increase of over Rs 71,000 crore in the year-ago period.