New Delhi, Feb 26 (UNI) The Confederation of Indian Industry (CII) has forecast that the Indian economy will clock an impressive GDP growth of 8 per cent plus for fiscal year 2005-06.
The industry chamber's prediction is in line with the quick estimates released by the Central Statistical Organisation (CSO).
According to CII, higher GDP growth this year is expected mainly due to the good monsoon, impressive growth of the manufacturing and services sectors and a higher share of the services sector in the GDP (from 53 per cent last fiscal to 54 per cent in the current year).
In its latest State of the Economy (SOE) report, the CII has reported a growth rate of 7.8 per cent in the industrial production during April-December 2005.
However, the report has stressed the need of propelling the growth in the mining and electricity sectors. The CII report notes that the capital goods sector has sustained its high growth momentum by growing at 15.7 per cent during the first three quarters of 2005-06. Consumer goods production continues to do well.
The report in its 'sector watch' discusses the challenges being faced by the Indian textiles sector. To double India's share in global trade of textiles from the current 4 per cent to 8 per cent by 2010 - as envisaged by the National Textile Policy (2000), CII has emphasised on the need of implementing several measures such as introducing flexibility in labour laws, encouraging large-scale production, reducing the delays in shipment of finished goods and greater availability of credit at lower rates of interest.
During April-December 2005, inflation stood at 4.7 per cent, which is lower than 6.7 per cent in the corresponding period of 2004. The industry chamber feels that forward looking policy measures would be essential if the inflation is to be contained in the range of 5-5.5 per cent in the next few quarters.
The revenue growth in April-December period 2005 from indirect tax has been slightly more than expected whereas the same from direct tax has been less than expected, the report observes. Revenue and fiscal deficits during this period are higher than the corresponding figures of last year and are likely to exceed the budget targets, CII has indicated.
The growth in exports as well as imports registered a decline during the first three quarters of the current fiscal. A major challenge lies in increasing the growth of exports. Bringing down the growth of imports may not be advisable at the moment, keeping in view the capital-intensive nature of imports and high oil prices, the CII report said.
During the first three quarters of 2005-06, the Real Effective Exchange Rate (REER) showed an upward trend. In December 2005, the Rupee was overvalued by about 7 per cent and hence the concern of rupee getting weak does not hold much water for the time being, according to the CII report.
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