The Confederation of Indian Industry (CII) has said India will see a 6 per cent gross domestic product (GDP) growth in 2003-04 because of an increase in exports.
However, the appreciation of the rupee would pose a problem, threatening the viability of Indian exports , the industry body said. A CII study also predicted that the wholesale price index would rise moderately in the current financial year.
The industry body expects the buoyancy in industry and services to continue, factoring in growth rates of 6.5 per cent and 7.5 per cent, respectively. Agricultural growth would rebound to normal levels, the CII said.
The end of the Iraq war would also benefit India in the form of sub-contracts for Iraqi reconstruction projects and hiring of Indian personnel in the region, it added.
According to the CII, one of the positive factors has been a decline in international crude prices, which had peaked in March.
In India, the impact of higher oil prices showed in a higher inflation rate, with the wholesale price index-based inflation crossing the 6 per cent mark in the last week of March.
The industry body pointed out that exports contributed significantly to GDP growth in 2002-03. Exports grew 16.8 per cent between April and February, 2002-03, compared to a decline of 0.5 per cent in the same period the previous financial year.
The International Monetary Fund has also predicted a continuation of the recovery in 2003 and 2004, with trade volumes expected to grow at 4.1 per cent and 6.4 per cent, respectively, in the two years.
However, currency appreciation posed a problem, the CII said. With capital inflows rising and the dollar remaining weak in the international markets, the rupee had continued to appreciate.
Unlike other Asian markets, India was relatively less affected by the economic cycles of the developed markets, the study pointed out.
