The Reserve Bank of India's (RBI) latest industry outlook survey, released today as a part of the central bank's first-quarter review of macroeconomic and monetary developments, ahead of its monetary policy review, suggested a further improvement in the overall business environment, including profit margins, during July-September 2006. | |
| Painting a bullish picture of the economy, the RBI said its survey respondents expected the financial situation to show an improvement during July-September, amid corporates increasingly availing of working capital finance. |
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| The central bank said industry production maintained its momentum during April-May 2006, with a growth figure of 9.8 per cent. The manufacturing sector, with double-digit growth of 10.9 per cent, remained the key driver of industrial activity, contributing almost 92.5 per cent of growth in the industry. |
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| The buoyancy in manufacturing and services sectors, and the positive business confidence suggested that the recent growth momentum in the Indian economy was likely to be maintained in 2006-07. The RBI has projected a GDP growth rate of 7.5-8.0 per cent for 2006-07. |
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| The buoyancy is reflected in the growth in bank credit to the commercial sector. The growth of 32.9 per cent in credit during 2006-07 (up to July 7, 2006) was on a base as high as 31 per cent a year earlier. |
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| On inflation, the RBI said pre-emptive monetary and fiscal measures had helped in containing inflationary expectations in the April-June quarter. |
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| "Inflation movements continued to be driven by supply shocks in the first quarter of 2006-07," it said. |
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| In a surprise move, the central bank had raised its key short-term interest rate by 25 basis points to 5.75 per cent on June 8. |
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