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In 2008-09, GDP growth is expected to be 7.1% and it might get worse in fiscal 2009-10 with growth projections made at 6.5 per % as the effect of job cuts, negative production growth rate and stagnant US and EU econ..
31 Dec 2008
Commodity Online
NEW DELHI:As the world economy slips into recession hitting the demand hard and the banking sector takes conservative approach towards lending to corporate sector, the CEOs Survey based GDP growth forecast done by Associated Chamber of Commerce and Industry (ASSOCHAM) Business Barometer (ABB) has downgraded it to 7.1 per cent for 2008-09 and predicted it to be 6.5 per cent for FY 2009-10. 83 per cent of the 250 CEOs surveyed by the ASSOCHAM projected the GDP growth for FY 2008-09 at 7.1 per cent with strong waves of negative economic sentiments flowing in the economy.

The outlook for the fiscal 2009-10 is seen as even worse with the growth projections made at 6.5 per cent as the effect of job cuts, negative production growth rate and stagnant US and EU economies would be felt on the Indian economy, said D S Rawat, ASSOCHAM Secretary General.

Seventy two per cent of the surveyed CEOs foresee a growth rate of 6.5 per cent in FY 2009-10. According to those surveyed, a two percent decline in the growth rate for FY 2008-09 over the previous year, capable of triggering a further slump in the economic activity, could pose serious threats of a slowdown in the forthcoming fiscal.

According to the ABB survey, from the earlier forecast of 7.6 per cent (July 2008), a downward revision of half a per cent has been witnessed on account of strong signals of global economic crisis seeping into the Indian economy, evident from exports, industrial production, FDI, excise duty collections all registering negative growth according to the latest announced data.

Ninety one per cent of the Surveyed CEOs believed India needs a strong fiscal stimulus even if it has to come at the cost of FRBM targets. The global financial crisis has intensively shaken the economic fundamentals across the world. To deal with a crisis of such intensity, it would be rational for the policy-makers to dispense with the FRBM targets for this; as well as the next year and inject a much needed dose of strong fiscal stimulus to reinstate a rapid slowing economy.

ASSOCHAM Business Barometer
AGRICULTURE: 83 per cent of the ABB respondents foresee agricultural growth at 3.9 per cent for FY 2008-09 further expecting the sectoral contribution of the agriculture sector to go up.

Normal monsoon and stabilized agriculture credit have led to favourable conditions for a decent agriculture growth rate this fiscal. However, on account of a slowdown in agricultural growth in H1 2008-09 at 2.9 per cent as compared to the growth rate of 4.5 per cent in the corresponding period of the previous year, the agricultural growth has been revised at 3.9 per cent.

INDUSTRY: With 76 per cent of the survey respondents foreseeing the industrial growth rate between 4-6 per cent range, Industrial growth is seen as one of the major factor causing a slippage in economic growth rate.

According to 89 per cent of the respondent CEOs, manufacturing activity is unlikely to pick up strongly from a negative growth of 1.2 per cent witnessed in October 2008 and expect it to take double hit from a rapid slackening domestic demand and a heavy shrinkage in new export orders due to the global recessionary forces.

SERVICES: Global financial crisis has started to take its toll on the service sector. According to 81 per cent of the surveyed CEOs, the sector which recorded an average growth rate of 10.7 per cent in last three years is expected to deteriorate down to below 9 per cent growth rate mark.

Paring under the current crisis; real estate, aviation, financial services, hotels and tourism are expected to slowdown further while telecommunication and railway transportation are expected to grow at decent pace. A moderate deceleration in IT services is also likely to be witnessed.
On the export front, 68 per cent of those surveyed stated a dip on the export front is likely to be accentuated further following a 12.1 per cent in October 2008.

RBI MEASURES : 64 per cent of the ABB respondents feel the round of interest rate cuts by the RBI to the tune of 250 basis points along with a 350 basis points reduction in the CRR will help in uplifting the GDP growth.

87 per cent of the survey respondents feel that the reverse repo rate should be reduced further to discourage banks from parking their funds with the RBI which could kick start lending to deal with the liquidity crunch faced by the Indian corporate sector.

The monetary easing measures by the RBI along with a major correction in commodity prices due to sluggish economic demand have seen inflation coming down to below 7 per cent before the end of calendar year against the central bank’s target of fiscal year ending 31st March 2009. With RBI shifting focus from price control to address growth concerns along with further anticipated rate cuts would enable Indian economy to register a decent growth of seven plus per cent this fiscal.


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COMMENTS (1)
Svelmurugan
09 Mar 2010
i need full particulars inrelation GDP calculation pls do the needful thinks
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