More than 8% GDP growth this fiscal: CII

The Confederation of Indian Industry (CII) has projcted more than 8 per cent GDP growth for the fiscal year 2005-06, in line with the estimates released by the Central Statistical Organisation (CSO).

A good monsoon, an impressive growth of manufacturing and services sectors and a higher share of services sector in the GDP (54 per cent this fiscal, against 53 per cent in the last fiscal) were some of the reasons for the high projection, the CII's State of the Economy reprt said.

Reporting a 7.8 per cent growth in industrial production during April-December 2005, the CII stressed the need for propelling the growth in mining and electricity sectors.

The report also noted that the capital goods sector had sustained its growth momentum by growing at 15.7 per cent during the first three quarters of 2005-06 and that the consumer goods production category also continued to do well.

The report stressed the need for implementing measures like introducing flexibility in labour laws, encouraging large-scale production, and reducing the delays in shipment of finished goods and a greater availability of credit at lower interest rates to double India's share in global textiles trade from the current 4 per cent to 8 per cent by 2010 as envisaged in the National Textile Policy (2000).

During April-December 2005, inflation stood at 4.7 per cent, lower than 6.7 per cent during the corresponding period of 2004. The CII felt that forward-looking policy measures would be essential if inflation was to be contained in the range of 5-5.5 per cent in the next few quarters.

Revenue growth from indirect tax in April-December 2005 was slightly more than expected whereas the same from direct tax was less than projections, it observed.

Revenue and fiscal deficits during this period were higher than the corresponding figures of the last year and were likely to exceed the Budget targets, the report noted.

The growth in exports as well as imports registered a decline during the first three quarters of the current fiscal. While the challenge was to increase the growth of exports, the report advised against bringing down the growth of imports, keeping in view their capital-intensive nature and high oil prices.

During the first three quarters of 2005-06, the real effective exchange rate assumed a rising trend.

In December 2005, the rupee was overvalued by about 7 per cent and hence the concern of rupee getting weak did not hold much water for the time being, the report said.