Economy to growth at 7.1% next year: Ficci survey

Ahead of the Budget, most of the forecasts of the economic growth for the current fiscal are not encouraging, but the situation next financial year will not be a good experience either, according to a recent economic outlook survey conducted by the Federation of Indian Chambers of Commerce and Industry (Ficci).

The study results expect the growth to be at 6.9 per cent for the current fiscal, while the next fiscal is projected at 7.1 per cent.

Ficci says the confidence in the economy has been lowered owing to a global uncertainty, along with an increasing inflation rate, deteriorating current account deficit (CAD) and a declining rupee.

Of the respondents, 33 per cent felt that the economy would grow between 6.5 and 6.9 per cent in 2011-12, while the rest (67 per cent) felt that growth would touch 7 per cent.

Notably, none believed that the economy would log in a growth rate higher than 7.5% in this fiscal.

The respondents -- a chunk of them from banking and financial services -- were not very optimistic of the next fiscal either.

While 35 per cent of the respondents felt the GDP growth rate would be higher than or equal to 7.5 per cent in 2012-13, 40 per cent felt the growth would stutter below 7 per cent.

Based on the responses, Ficci estimated the GDP growth in current fiscal to 6.9 per cent and for the next fiscal marginally higher at 7.1 per cent.

The depreciation in the rupee was attributed by the respondents to a widening CAD, as felt by 61 per cent of the respondents. At the same time, 54 per cent believed that perhaps an earlier indirect intervention by the Reserve Bank in foreign exchange market might have helped to pull back the rupee.

Further, the industry has also expressed worry over the fiscal deficit with estimating at 5.7 per cent for this fiscal and projecting at 5.1 per cent for the next.