GDP growth at 8.5-9%, but inflation a worry: Survey

Last Updated 25 July 2010, 04:41 IST

"Businesses are upbeat on the domestic economy despite the global uncertainties and are maintaining their investment momentum," Confederation of Indian Industry (CII) President Hari Bhartia said while releasing the chamber's snap poll of 90 CEOs.

Over 50 per cent of the CEOs representing different sectors expect the country's gross domestic product (GDP) growth in 2010-11 to be in the range of 8.5 to 9 per cent, he said.

The Prime Minister's Economic Advisory Council in its Economic Outlook for 2010-11, released last week, said the economy is expected to expand by 8.5 per cent.

While the CEOs are upbeat on the GDP, high wholesale price based inflation is a cause of concern for them.

About 65 per cent of them expected inflation for March 2011 to remain above 6.5 per cent as against the RBI' expectation of 5.5 per cent.

"The (CEOs') responses indicate that while Indian firms are positive on growth, they are concerned about the inflationary environment and the impact it may have on their profitability," CII Director General Chandrajit Banerjee said.

Prime Minister Manmohan Singh at the meeting of the National Development Council on Saturday said the government expects good monsoon rains to bring down wholesale price based inflation to around 6 per cent by December.

Food inflation is above 12 per cent and overall rate of price rise is above 10 per cent.

The chamber further said in view of inflation remaining high and the economy reporting robust growth rates, many observers expect the RBI to hike policy rates again in its monetary policy on July 27.

Over 90 per cent of the CEOs feel that banks would increase lending rates if the RBI chooses to hike key policy rates again.

"This would put pressure on their margins," CII said.

Though global economy is showing recovery, some uncertainty has risen because of economic trouble in some of the European countries.

(Published 25 July 2010, 04:41 IST)

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