CII expects moderation in economic growth on interest woes

Concerned about firming interest rates and inflationary pressures, majority of India Inc surveyed by CII expects the economy to grow by 8 per cent during 2010-11, lower than the RBI and government estimates.

As many as 59 per cent of the respondents in the survey said that the economy was expected to expand by 8 per cent in the current fiscal.

The government has projected GDP growth of 8.5 - 8.75 per cent this fiscal, while the RBI estimated it to be 8.5 per cent. The GDP recorded 8.8 per cent growth in the first quarter of this fiscal.
    
"There has been some moderation in business confidence, reflecting concerns about the outlook for the current quarter," CII Director General Chandrajit Banerjee said.
    
In a bid to rein in inflation, which was pegged at 8.62 per cent in September, the RBI has raised short term rates five times this year.
    
The Business Confidence Index of CII for October-December, fell by 1.4 points to 66.2 as compared to an increase of 1.5 points during April-September period, as inflationary conditions and high interest rates weighed on the industry mind.
    
The survey said inflationary conditions, slackening consumer demand, cost and availability of labour and high interest rates were the top concerns.
    
It said 70 per cent of the respondents expected average inflation for 2010-11 to be above 6 per cent.