New Delhi, Dec 27: With higher investment rates driving the Indian economy, industry body Assocham has revised its projection of GDP growth to nine per cent in fiscal 2007-08.
The Assocham Business Barometer (ABB) revised its earlier projection of 8.7 per cent growth, as 61 per cent of the CEOs polled felt that investment momentum will be able to make up more than for any possible signs of sluggishness in demand.
Also, 65 per cent of the 175 CEOs surveyed by ABB during first two weeks of December across different segments of economy, said the nextphase of GDP growth will be led by high rate of investment, evident in several sectors.
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, said the industry body.
The AEP Study on planned corporate investment conducted during August and September had shown that capex announcements worth Rs 175 thousand crore were made, majority of which went to petroleum, steel, cement and real estates.
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 per cent 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 per cent growth in the fiscal 2007-08, which affects purchasing power of 65 per cent Indians and hence would boost the aggregate demand.
The agriculture grew by 3.8 per cent in Q1 and 3.6 per cent in Q2 of the current financial year, the survey pointed out.
Considering the re-bound by the manufacturing growth in the month of October, 73 per cent CEOs have revised their growth prospects for the industry, to 10 per cent in this fiscal.
Production in manufacturing sector grew by 13.3 per cent in month of October, which has lifted the growth rate for the entire period of April-October 2007 to 9.7 per cent, closer to 10.1 per cent for the same period last year.
A monthly analysis of the core infrastructure sector has shown that growth in coal production has picked from the low of 0.9 per cent in first quarter to 8.7 per cent in August and 9.2 per cent in October.
Electricity generation, which grew by 7.6 per cent in the first half of the fiscal, has bounced back the momentum in November in which it grew by 9.4 per cent as compared to 5.2 per cent 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.
About 75 per cent of the ABB respondents were optimistic that there would be 10.5 per cent growth in service sector.
Many of them were of the opinion that the crisis in US economy would compel the offshore companies to increase the outsourcing of business to India as a measure of cost-cutting.