India's economic growth may fall below 6 per cent: CII

A majority of CEOs are pessimistic about the Indian economy and feel that the gross domestic product (GDP) growth would fall below 6 per cent in the current financial year and will be in the range of 6 to 6.5 per cent in 2013-14.

According to a snap poll, conducted by the Confederation of Indian Industry (CII) among the members of its National Council, a majority of chief executive officers (CEOs) remain pessimistic about the outlook for the economy in the current year and expect only a moderate recovery in the forthcoming year.

The poll results indicate that GDP growth during 2012-13 is expected to remain below 6 per cent by as many as 44 per cent of the respondents while no one expects it to cross seven per cent.

Another 44 per cent expect it to remain between 6 and 6.5 per cent. The scenario is not likely to improve much in 2013-14 either as more than half of the respondents (52 per cent) expect GDP growth to remain in the range of 6 to 6.5 per cent, while only 36 per cent expect it to lie between 6.5 per cent and 7.5 per cent.

"This reflects low confidence levels in industry. The first quarter GDP growth at 5.5 per cent corroborates the fact that the slowdown is sustaining," Chandrajit Banerjee, director general, CII, said in the survey report.


According to data released by the Central Statistical Organisation (CSO) on Friday the Indian economy grew at a sluggish 5.5 per cent in April-June 2012 period, compared to 8 per cent in the corresponding quarter of previous year.

"Our best hope would be that the economy is bottoming out. However, from the results of the snap poll or from government data, we do not have adequate indicators to substantiate this hypothesis," Banerjee said.

On inflation, 56 per cent CEOs expect the average rate of inflation in 2012-13 to be in the range of seven to eight per cent, while 32 per cent of the respondents expect it to be between six to seven per cent.

Only 12 per cent expect to higher between eight to nine per cent. These expectations are in line with the seven per cent inflation projected by the Reserve Bank of India (RBI).

Majority of the respondents (over 80 per cent) expect both domestic and international investment either to increase or remain unchanged during 2012-13.

Almost half of the respondents expect domestic investment to pick up as compared to 43 per cent in case of international investment. Additionally, 75 per cent of the respondents believe capacity utilisation will either increase or remain unchanged in 2012-13.