Downturn to last for over a year: Assocham

It may take another 14 months before the Indian economy gets back to recovery with interest rates and lower production costs playing a key role in revival of the sentiment, says an industry survey.

About 84 per cent of the chief executive officers polled in the Assocham Business Barometer (ABB) were of the opinion that poor business confidence in India may extend till the middle of the next year.

However, about 77 per cent of the 237 CEOs said the growth rebound in India would be faster than the developed economies of the US and Europe.

"The key driving factors for end of the slowdown in India include reduction of repo and reverse repo (key RBI rates) infusing liquidity in the markets and fall in inflation providing cushion to the industry in terms of reduced cost," the chamber said.

The industry expects the economic activity to pick momentum after the elections as the stalled projects would resume and fresh budgetary allocations would boost the economy, it said adding that the combined impact of these factors would be felt after the end of 2009-10.

The global economic imbalance and tight monetary policy has hit the country's growth rate severely.

"Huge job cuts across various sectors have worsened the situation," Assocham President Sajjan Jindal said.

The survey further said that the foreign trade scenario is expected to worsen in the coming months despite the depreciating rupee and incentives announced by the government.

Around 62 per cent of the industry leaders expect the exports growth rate to remain in the negative zone as there are bleak chances for the recovery of consumption rate in the US, it said.

In January, the country's exports declined by 15.9 per cent, for the fourth month in a row.