NEW DELHI: Riding on the back of manufaturing and services sector perforamnce, Indian economy is likely to clock above 8 per cent growth rate almost nearing the last year performance of 8.4 per cent, industry body Assocham's survey said.
The concerns on high crude prices and rising global interest rates do bother the industry leaders who have lined up big time investments for capacity expansion to meet the growing demand in the domestic economy and in the export market, Assocham Business Barometer survey said.
The survey of top 270 CEOs and CMDs across various sectors done between August 7 and August 21 revealed that from eight out of 10 sectors covered felt that the growing pace of consumer demand and the investment requirements would more than make up for the hiccups generated on account of higher interest and rising energy prices. They remained optimistic about India achieving an average eight per cent growth.
However, CEOs from only two sectors, namely oil and petroleum, and textile, opined that the increasing cost of raw material wages and the continuous dismal performance of the agriculture sector could spoil the party.
The sectors covered in the ABB survey included capital goods, automobile, FMCG, chemicals and chemical products, pharmacutical, gems and Jewellery, textiles, oil and petroleum, informaion technology, and financial services.
Concerned about agriculture sector growth, 92 per cent of the respondents said the farm sector needs massive reform and big public investments so that the dependence of this sector on Monsoon is reduced. MORE PTI DP SM 08302051 DEL Unless we lift agricultural sector from this level, the fruits of rising GDP would not show on the overall quality of life for a vast majority of Indian, Assocham, President, Anil K Agarwal said.
Though, the corporate chiefs were not comfortable with the rising interest rates, they remained confident that the increasing cost of money will not have any significant impact on industrial growth, which will continue to remain above 9.5 per cent in the fiscal 2006-07, thanks to healthy order books and investment climate.
It is evident from the trend in the first few months of the fiscal 2006-07 that the industry would continue to grow, even though the interest cost has increased. For the April-May period of the current financial year, the industrial production went up by 9.8 per cent, it said.
This is because the percentage of interest cost in the total expenditure of the companies does not work out a significant level. It averages between 1.33 per cent and 2.79 per cent, the survey said.
The survey said, part of the optimism for maintaining the plus 8 per cent GDP growth comes from vibrant performance in the external sector helping the merchandise as well as services exports maintaining good performance.
The merchandise export shot up by 40.67 per cent to 10.17 billion dollar in July as compared to 7.23 billion dollar in the same month last year.
Sixty seven per cent of the respondents agreed that RBI has struck a right balance between inflation and interest rates.
With increasing globalization, India is aligned to the global economic scenarios and going forward its ability to manage the inflation and interest rate would get reduced, it said.