Economic growth slipped to a nine-year low of 6.5 per cent last financial year, but India Inc fears further deceleration in the GDP expansion during 2012-13, shows a survey. Industry wants the government to unleash a slew of policies to perk up the economy facing adverse circumstances.
In the survey conducted by the Confederation of Indian Industry (CII), 43 per cent of 110 respondents felt that India's GDP growth would fall below 6.5 per cent but would not go below six per cent, while 40 per cent of them expected it to nosedive to less than six per cent.
Only 13 per cent of respondents were optimistic that the economy would grow in the range of 6.5 to seven per cent, and just five per cent expected the GDP to expand in the range of seven to 7.5 per cent. Some of the respondents would be common, so the sum total has exceeded 100 per cent.
CII said that the survey was conducted in various sectors of the economy which together contribute to 50 per cent of the country's production.
The majority of senior industry leaders expected their top line and bottom line growth to decline and in some cases it was expected to be negative.
“About 43 per cent of the respondents expected net sales growth to stagnate or decline during the year 2012-13. Similarly, 57 per cent of the senior industry leaders expected the bottom line growth to either stagnate or decline. This clearly indicates that there will be pressure, leaving less room for capital expansion,” CII said in the survey.
On expanding investment, 32 per cent revealed expansion plans in their companies would continue to be at the same level as compared with last year, while 29 per cent of them said there would be contraction in expansion plans domestically.
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On investment abroad, 47 per cent of them said their preference was to maintain the same levels as in the last year, while 43 per cent of them expected to increase investments overseas.
A majority of around 50 per cent respondents saying that the hiring activities in the current fiscal would remain stagnant.
To contain the worsening economic situation, the CII called for a comprehensive revival package. The industry lobby group asked for a cut of 100 basis points in repo rates as well as in the cash reserve ratio. The Reserve Bank is slated to come up with its policy review on June 18.
Respondents in the survey also called upon the government to clear 50 large projects in the next 30 days, allow 25 per cent accelerated depreciation for investments in plant and machinery and announce clear-cut plans for fiscal consolidation.
“In addition, a direction towards further opening up of the economy by relaxing FDI limits in civil aviation, defence production and opening up multi-brand retail to FDI will greatly boost global investors' confidence and help arrest further slide of the rupee”, Chandrajit Banerjee, director general in CII said.
To arrest further rupee depreciation against the dollar, the respondents called for a stronger intervention by the RBI, allowing importers of items like oil to have direct access to forex, wooing private transfers from NRIs and Persons of Indian Origin by issuing bonds like Resurgent India Bonds.
The findings of the survey are in sharp contrast to Finance Minister Pranab Mukherjee's optimism who said that deceleration in economic growth has bottomed out and the economy would revive in the current fiscal. The budget and the Economic Survey pegged economic growth this fiscal at 7.6 per cent.