India still to grow by 6.1-6.5% in FY09: CII

The Confederation of Indian Industries (CII) has estimated that India would grow by 6.1-6.5 per cent during 2009-10 despite the ongoing recession.

Releasing its latest report titled ‘States of Economy’ on Saturday, the industry body said that this would be held on the back of higher growth in agricultural sector and some other key factors like decline in interest rates, moderation in prices of food and fuel and reduction in excise duty and service tax.

“We are factoring in GDP (gross domestic product) growth of 6.1-6.5 percent in 2009-10, based on sectoral growth rates of 2.8-3 percent, 5-5.5 percent and 7.5-8 percent, respectively for agriculture, industry and services,” said CII in the released report.

India that was growing over a rate of 9 per cent, last year plunged to 7.1% due to global turmoil and sluggishness in domestic demand. The bigger fall held in the third quarter of last year.

To impede the sinking growth rate, the Central government announced three stimulus packages, which provided some relief to the industrial, retail and export sector.

Last fiscal, the food grain production stood at 227.9 million tonnes, short of the targeted 233 million tonnes, while industrial growth decelerated to 2.8 percent during April-February 2008-09 from 8.8 percent in the like period the year before.

Suggesting to boost the growth rate, the financial institute said, “The drivers of economic growth have to come from domestic sources. The government therefore needs to maintain higher spending, especially in the creation of public assets. Monetary policy, in turn, needs to be supportive.”

The report has been prepared on the financial performance of 324 companies comprising 173 manufacturing and 151 services sector companies of the time span of fiscal year (FY) 2008 (April 01, 2008 - March 31, 2009).

Most of the companies have registered sharp fall from 23.7 percent in FY 07 to 8.7 percent in FY 08.

In the same time, the merchandise export grew only 3.4% to $168.7 billion from $163.13 billion in 2007-08, but it was well short from the target of $200 billion.