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FICCI predicts 6.7% growth rate of India

New Delhi, Fri, 25 Jan 2013 NI Wire

The Federation of Indian Chambers of Commerce and Industry (FICCI), an association of Business organizations in India, Friday said in a released statement that according to FICCI's Economic Outlook Survey, India can grow at 6.7%, slightly higher than previous prediction.

Releasing the result of FICCI's Economic Outlook Survey, FICCI President Naina Lal Kidwai said that India's economy can grow at 6.7% rate, slightly higher that its previous survey prediction in which it was predicted at 6.5%.

Giving the reason behind this higher growth rate, FICCI predicted that if Reserve Bank of India (RBI) cuts its policy rate, it can boost industrial growth and consumption.

"The possibility of RBI cutting rates will provide industry a fresh dose of oxygen and along with the expected US recovery, will breathe some life back into industry" , opines Ms Kidwai. "With inflation risk receding (core inflation at a 36 month low in Dec 2012), there is indeed some scope for easing in the forthcoming monetary policy", added FICCI President.

Further, the FICCI survey respondents expect a repo rate cut of 25-50 bps in the forthcoming review of the monetary policy scheduled on 29 January, 2013. Along with this a quarter of total respondents expect a CRR rate cut of 25-50bps. A majority also felt that a reduction of 75bps to 100bps in repo rate through FY14 is more likely. This is critical for revival of growth.

"The wide current account deficit remains a constraint on monetary policy easing", believes Kidwai.

"With exports witnessing a decline for eight consecutive months and global demand likely to remain flat in the near term, it will be vital to extend support to the labour intensive export oriented units. Though the government recently announced some measures like extending the interest subvention by another year for an extended list of sectors, it will be important to keep track of the situation and take adequate steps wherever necessary", said Ms. Naina Lal Kidwai, President, FICCI.

The participating economists indicated that among the varying objectives on the immediate government reform agenda, implementation of GST should be the highest priority which is indeed FICCI's agenda.

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