SME Times - Industrial Growth to Slide to 9.2 Percent in 2010-11: FICCI, Indian Industry Growth, Indian Industry Economy Growth, India Industrial Growth, Indian Industrial Economy Growth

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SME Times News Bureau | 17 Apr, 2010
The industrial economy is expected to look down, with growth paring from 10 percent in 2009-10 to 9.2 percent in 2010-11, the growth in agriculture & allied services and services is forecast to turn in a better performance, leading economists have forecast in FICCI’s Economic Outlook Survey.

The FICCI survey reveals that while the economy appears to be in fine fettle. The GDP growth is expected to clock 8.7 percent in the last quarter of 2009-10 and further improve to 8.9 percent in the first quarter of the current fiscal (2010-11).

According to the 12 economists participated in the survey, agriculture and allied services are expected to grow by 4 percent in 2010-11.

"Economists project agriculture and allied services to achieve a negative growth of 0. 2 percent in 2009-10, but this performance is expected to look up in the current fiscal to 4 percent," the FICCI Economic Outlook Survey said. It said the services sector is likely to look up from 8.1 percent to 9.3 percent during the fiscal.

FICCI's Economic Outlook Survey was conducted during the period March 20, 2010 to April 10, 2010. Twelve economists of repute participated in the survey. These economists largely come from the banking and financial sector. The sample however also includes economists from industry and research institutions.

FICCI also expects further monetary tightening by the central bank in its monetary policy review on Tuesday.

"We must be prepared for another round of monetary tightening by the RBI. Repo (rate at which it lends to banks) and reverse repo (interest it pays to banks on deposits) are expected to be hiked by 25 basis points each. CRR (amount banks park with RBI) could be hiked by up to 50 basis points," it said.

It also said given the comfortable liquidity position in the system, a hike in policy rates by RBI is unlikely to be followed by an immediate hike in lending rates by banks.

The survey also said the private sector would raise more money from abroad as economists expects the investment cycle is gaining more and more strength.

There is, however, room for cheer on the investment front. There is a consensus amongst economists that investment cycle is gaining strength. They expect more money to be raised through the ECB, FCCB, ADR / GDR route.

Companies are also expected to raise sizable resources from the equity market in the current year in view of the trend observed in the latter part of 2009. With sub-PLR lending being discontinued following the introduction of base rate framework, one can expect companies, especially large corporates, to use Corporate Deposits and Commercial Paper route in a larger manner for raising resources.