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Tuesday December 30, 05:00 PM
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India CEOs see FYO9 GDP growth at 7.1 pct - survey
NEW DELHI (Reuters) - The Indian economy is likely to grow by 7.1 percent in 2008/09, slower than 9 percent the previous year, as the global downturn and high borrowing costs trim demand, a survey of chief executives showed on Tuesday.
The survey on 250 CEOs conducted by the industry body Associated Chambers of Commerce and Industry (ASSOCHAM) also said growth could further slide to 6.5 percent in FY10 as the global economic situation worsens.
The government needs to provide another "strong fiscal stimulus" to lift growth even if it widens the fiscal deficit gap, the survey said, while revising downwards the forecast to 7.1 percent from 7.6 percent estimated in July.
Earlier this month, the government announced a 200-billion-rupee extra spending plan, cut factory gate duty rates by 4 percentage points on a wide range of manufactured goods and reduced state-set fuel prices to revive sagging growth.
The Reserve Bank of India has cut its key lending rate -- the repo rate -- by 250 basis points since October to spur growth. The repo rate is now at 6.5 percent.
"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 7 percent plus this fiscal," ASSOCHAM said.
Indian CEOs also urged the central bank to reduce the reverse repo rate, the rate at which it borrows funds from banks, so that it could encourage banks to lend more money to corporates facing liquidity crunch, the survey said.
The survey forecast agricultural sector to grow by 3.9 percent, industry by 6 percent and service sector by 8.7 percent in 2008/09.
