The country’s economic growth is expected to be in the 6-6.5 per cent range in 2013-14, while wholesale price index inflation may be above 7 per cent, according to CII survey.
“Majority of the respondents expect the GDP growth to improve and come in the range of 6.0-6.5 per cent for the current fiscal as compared to 5 per cent in 2012-13 on account of rise in new orders and better sales,” it said.
This is indeed a healthy sign for the economy and bodes well for growth prospects, it added.
However, the survey said, in an indication that the downside risks to growth have not abated yet, 36 per cent of the respondents expect GDP to grow below 6 per cent in the current year.
The government had projected that the GDP growth in the current fiscal would improve to 6.1-6.7 per cent from 5 per cent in 2012-13.
While the wholesale price (WPI) based inflation fell to over three-year low of 4.89 per cent in April, retail inflation was still high at 9.39 per cent during the month.
“Worryingly, as far as WPI inflation is concerned, most of the respondent firms (40 per cent) expect it to lie above 7 per cent for the current fiscal which is way higher than CII’s forecast of 5.5-6.0 per cent for the year,” the survey said.
Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8 per cent in the January-March quarter.
The GDP growth was decade’s low of 5 per cent for the entire 2012-13. In 2011-12, India’s economic growth was at 6.2 per cent.
The 83rd Business Outlook Survey is based on the responses from 180 members. Majority of the respondents (57.1 per cent) belonged to large-scale firms, while the rest were from the Micro, Small and Medium Enterprises (MSMEs).
The survey said majority of the respondents expect credit availability to remain either stagnant or increase in the current fiscal.
“The rise in WPI inflation forecast for the current fiscal is certainly not a good news for the economy as moderating trend in inflation would have given RBI the legroom to ease interest rates in order to spur growth,” CII Director General Chandrajit Banerjee said.
“Majority of the respondent firms expect repo rate and Cash Reserve Ratio (CRR) to be cut by 50 bps in the current financial year,” the survey said.
The RBI is scheduled to announce its mid-quarter policy review on June 17. In its last review, the Reserve Bank had cut the key interest rates by 0.25 per cent.
The survey said domestic economic and political instability, high level of corruption and infrastructure and institutional shortages emerged as the top three concerns for most firms.
Businesses felt that risk from exchange rate volatility was of less importance at the moment, it added.