GDP projections at 9 percent for 2007-08: Assocham

By SiliconIndia   |   Friday, 28 December 2007, 12:46 Hrs
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New Delhi: Indian industry body Assocham has revised its projection of GDP growth rate to nine percent in fiscal 2007-08

The Assocham Business Barometer (ABB) revised its earlier projection of 8.7 percent growth, as 61 percent of the CEOs polled felt that investment momentum would be able to make up more than for any possible signs of sluggishness in demand.

According to survey by ABB 65 percent of the 175 CEOs, said the next phase of GDP growth will be led by high rate of investment, evident in several sectors.

It also said that the investment momentum is expected to continue on back of huge capacity expansion in infrastructure sectors, increased budgetary allocations by the government and corporate capital expenditure.

However, challenges thrown by appreciating rupee and global slowdown coming in the way of country's economic growth is thought to be a cause of concern by 75 per cent of the corporate heads.

About 72 percent of the ABB respondents were confident that sustained growth in agriculture and services imparts a positive outlook to the GDP growth. Almost 69 per cent of them felt that agriculture would be able to register above 3.5 percent growth in the fiscal 2007-08, which affects purchasing power of 65 percent Indians and hence would boost the aggregate demand.

The agriculture grew by 3.8 percent in Q1 and 3.6 percent in Q2 of the current financial year, the survey pointed out.

Production in manufacturing sector grew by 13.3 percent in month of October, which has lifted the growth rate for the entire period of April-October 2007 to 9.7 percent, closer to 10.1 per cent for the same period last year.

Electricity generation, which grew by 7.6 percent in the first half of the fiscal, has bounced back the momentum in November in which it grew by 9.4 percent as compared to 5.2 percent last year.

On back of the growth in transportation, telecom and financial sector, the services segment of the economy is expected to remain buoyant, pulling the GDP growth.

Majority who participated in the survey opined that the crisis in U.S. economy would compel the offshore companies to increase the outsourcing of business to India as a measure of cost cutting.

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