New Delhi: Expecting some recovery from the economic slowdown, industry chamber CII today projected the economy to expand by 6.1-6.5% in the current fiscal as demand for consumer goods and services is likely to get a boost due to cuts in taxes and interest rates.
“In 2009-10, we expect some recovery to be driven by the decline in interest rates...reduction in in excise duty and service tax should also drive demand for consumer goods and services. We are therefore expecting GDP growth of 6.1-6.5% in 2009-10,” the Confederation of Indian Industry (CII) said in a report on the ‘State of the Economy.’
The chamber’s projection is based on expected 2.8-3% growth in agriculture, 5-5.5% in industry and 7.5-8% in services.
Under the impact of global financial meltdown, India’s economic growth rate slowed down drastically to 5.3% in the third quarter of last fiscal, from 8.9% in the corresponding period of 2007-08.
For the first nine months of 2008-09, the growth rate stood at 6.9% against 9% a year ago, making it difficult to achieve the projections of 7.1% for the entire fiscal as estimated by advance estimates of the Central Statistical Organisation.
To enable India witness more decisive recovery, the chamber demanded further monetary easing by cuts in short term lending and borrowing (repo and reverse repo) rates by RBI by at least 50 basis points, implementation of large infra projects and reviving of confidence by ensuring a business-friendly environment.
At a time when the global economy and global trade are projected to contract, it will be extremely important to maintain counter-cyclical fiscal and monetary policy, it added.