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More bad news for the Indian economy

October 14, 2013 17:35 IST

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The ongoing economic slowdown seems to have weighed down on the confidence of India Inc, with a majority of chief executive officers expecting a growth rate of below 5 per cent in the current fiscal, according to a poll conducted by industry body Confederation of Indian Industry.

"The CEO snap poll indicated that growth may not touch 5 per cent in the current fiscal. Most of the respondents (42 per cent) expected the economy to grow in the range of 4.5 to 5 per cent," a CII statement said.

Indicating that economic revival will take time, 65 per cent of the respondents said that they did not expect it before the second quarter of next fiscal.

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Image: A vendor holds garlands of marigold flowers as he waits for customers at a wholesale flower market in Kolkata.
Photographs: Rupak De Chowdhuri/Reuters

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With General Elections just a few months away, political uncertainty was ranked as the highest risk factor affecting the business confidence of India Inc, according to the poll.

Also, 82 per cent of the respondents felt the value of rupee against US dollar was favorably affecting exports.     

Further, a majority (53 per cent) of the respondents expected the rupee to prevail below 62 per dollar by the end of the current fiscal with current account deficit easing.

Regarding the efficacy of the Cabinet Committee on Investment in clearing large projects, 56 per cent of the respondents did not feel the panel had raised investments so far at the ground level.

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Image: A worker loads iron rods in a truck at an iron and steel market in an industrial area in Mumbai.
Photographs: Danish Siddiqui/Reuters

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"There is a need for strengthening policy intervention to revive investment demand, both by the government as well as RBI.

“The government should focus on stepping up capital expenditure whereas RBI should adopt a softer monetary stance," CII Director General Chandrajit Banerjee said.

Besides, indicating that the economy is moving towards a situation of stagflation, majority of the respondents (42 per cent) expected inflation to increase moderately in the second half of the year.


Image: A salesman waits for customers at a roadside store selling clothes at a market in Mumbai.
Photographs: Danish Siddiqui/Reuters

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