India's G+DP may exceed 6 pc in current fiscal: CII



The CII National Council has observed that Indian economy was back on track with demand picking up across the sectors and an increase in inflow of foreign investments as the country being viewed as a favourable investment destination. “Projects which had been placed on the backburner after the financial crisis are slowly coming back on the table. Although bank credit growth remains sluggish, this has been partly compensated by other sources of finance from the capital market,” the CII said in a report.

However, the “State of the Economy Report” expressed concern about the performance of agriculture. “While industry and services have recovered on the back of the government’s stimulus package, the performance of agriculture is causing concern,” it said adding that the stimulus package should not be withdrawn in near future.

“Economic indicators are looking up — industrial production has shown a significant upturn, business confidence has surged, financial markets have stabilised and capital inflows have returned,” said CII Director General Chandrajit Banerjee. According to the report, corporate results for the second quarter of the current fiscal showed some signs of stabilisation. Results available for a sample of 1,022 companies (774 manufacturing sector and 248 service sector) for the quarter ending September revealed that despite a year-on-year decline of 5.4 per cent in net sales of companies, net profits have increased by 38.5 per cent on a year-on-year basis. 

On a quarter-on-quarter basis, net sales have increased by 9.2 per cent after three successive quarters of decline, indicating a recovery.  However, net profits of companies have declined by 0.2 per cent due to higher raw material and interest costs.

The CII report observed that even as output is recovering, India’s international trade which started falling since December 2008 continued its precipitous fall in the first half of the fiscal year 2009-10.  However, as imports have fallen at a faster rate than exports, India’s trade deficit and its current account deficit has narrowed in comparison to the previous year.

With capital inflows resuming in the first quarter of 2009-10, the overall Balance of Payment ended in a marginal surplus.

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