Country’s economy is likely to grow in the range of 4.5 to 5 per cent during the second half of the current fiscal, a CII survey said on Sunday. The industry body does not see any possibility of a significant improvement in the GDP growth for the October- March period as against the first half of the current fiscal, and asked the government to take necessary steps to improve investment climate in the country and boost domestic demand.
In its survey report, the CII has predicted “the economy in the second half would grow in the range of 4.5-5 per cent”. The country’s economy grew by 4.6 per cent in the first six months of the current financial year. “The economy may have already bottomed out in the previous quarter and recovery process may already be in place, albeit fragile,” the report said, adding that political uncertainty was the biggest concern.
To hasten the clearances of the held-up projects, the government should halve the threshold limit of fast-track projects from the current level of Rs1,000 crore, it said. “High food inflation, growth uncertainty and rising borrowing costs have all impeded consumer demand. With inflation showing some signs of moderation, it is time that the monetary policy is now directed at stimulating growth,” CII Director General Chandrajit Banerjee said in a statement.
Substantiating the fragile economic recovery argument, most of the respondents (48 per cent) expect only moderate recovery in gross sales in the fourth quarter over the previous one. Recovery in sales, even if moderate, is underpinned mainly by revival in export demand in the backdrop of improvement in global economic prospects.
Over 60 per cent of the respondents felt that their exports would increase at a moderate pace during the current quarter. Notably, improvement in sales is being supported by an improvement in capacity utilization, as over half (53 per cent) of respondents expect their capacity utilization to improve moderately in the fourth quarter.
Even though most (38 per cent) of the CEOs saw investment staying at around the same level in the fourth quarter as in the third quarter, next highest 29 per cent respondents expected it to increase moderately over the same time period. In view of the stagnation of investment expansion in majority cases, credit demand was also seen to stagnate in the fourth quarter by majority (52 per cent) of the respondents. For the April-December period, exports aggregated $230.3 billion and imports $340.3 billion, while the trade deficit stood at $110 billion.