Ficci lowers FY12 GDP growth to 6.9%

Industry chamber Ficci today said the Indian economy could grow at a slower pace of 6.9% in the current fiscal, as against 8.5% in the previous year.

"The fiscal 2011-12 has the possibility of posting a GDP growth rate of 6.9% based in weighted average," the Ficci Economic Outlook Survey said.

As many as 33% of the respondents felt the economy could grow between 6.5% and 6.9% in FY12.

The remaining 67% feel that the growth rate will touch 7%, the survey said.

The government expects the economy to grow at around 7% in the current fiscal. The pace of growth is slower than the 9% rate projected at the time of the Budget on account of the slowdown in the global economy.

The survey further said the inflation rate would be 7% by March-end, based on the weighted average.

"More than 50% of the respondents feel that the inflation rate would be around 7-7.5% in March-end, 2012. Only 24% of the respondents fell that inflation would still stick around 7.5% in the next fiscal," the survey said.

Overall inflation has remained near double digits since December, 2010. It eased to 7.5% in December, 2011, driven mainly by the drop in prices of food items. The Finance Ministry expects inflation to come down to 6-7% by March-end.

The Reserve Bank has hiked interest rates 13 times since March, 2010, to control inflation. Industry is of the view that repeated rate hikes have made borrowings costlier and has impacted investments.

Although the RBI took a pause on its rate hike strategy at its policy review last month, there is wide anticipation that it will keep policy rates unchanged tomorrow in its third quarterly review of the monetary policy, even though inflation has eased and the growth rate has slowed down.

"Notwithstanding the decline in inflation, the majority of the respondents still believe that the RBI may not go for a cut in the repo rate... A greater number of respondents believe a CRR cut may be a better option as compared to repo rate cut," the survey added.