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The country's economic growth is expected to be in the 6-6.5% range in 2013-14, while wholesale price index inflation may be above 7%, according to CII survey.
"Majority of the respondents expect the GDP growth to improve and come in the range of 6.0-6.5% for the current fiscal as compared to 5% in 2012-13 on account of rise in new orders and better sales," it said.
This is indeed a healthy sign for the economy and bodes well for growth prospects, it added.
However, the survey said, in an indication that the downside risks to growth have not abated yet, 36% of the respondents expect GDP to grow below 6% in the current year.
The government had projected that the GDP growth in the current fiscal would improve to 6.1-6.7% from 5% in 2012-13.
While the wholesale price (WPI) based inflation fell to over three-year low of 4.89% in April, retail inflation was still high at 9.39% during the month.
"Worryingly, as far as WPI inflation is concerned, most of the respondent firms (40%) expect it to lie above 7% for the current fiscal which is way higher than CIIs forecast of 5.5-6.0% for the year," the survey said.
Pulled down by poor performance of farm, manufacturing and mining sectors, economic growth slowed to 4.8% in the January-March quarter.
The GDP growth was decade's low of 5% for the entire 2012-13. In 2011-12, India's economic growth was at 6.2%.
The 83rd Business Outlook Survey is based on the responses from 180 members. Majority of the respondents (57.1%) belonged to large-scale firms, while the rest were from the Micro, Small and Medium Enterprises (MSMEs).
The survey said majority of the respondents expect credit availability to remain either stagnant or increase in the current fiscal.
"The rise in WPI inflation forecast for the current fiscal is certainly not a good news for the economy as moderating trend in inflation would have given RBI the legroom to ease interest rates in order to spur growth,"CII Director General Chandrajit Banerjee said.
"Majority of the respondent firms expect repo rate and Cash Reserve Ratio (CRR) to be cut by 50 bps in the current financial year," the survey said.
The RBI is scheduled to announce its mid-quarter policy review on June 17. In its last review, the Reserve Bank had cut the key interest rates by 0.25%.
The survey said domestic economic and political instability, high level of corruption and infrastructure and institutional shortages emerged as the top three concerns for most firms.
Businesses felt that risk from exchange rate volatility was of less importance at the moment, it added.
