Economic turnaround only is second half or next fiscal – CII Survey

Shimla: Even though business outlook for the April-September 09 period is better than the performance over the last six months, a CII Northern Region Business Outlook Survey finds but projects that an economic turnaround and recovery is only expected in the half of 2009-10 or beyond.

Based on a response from 132 industries from Chandigarh, Delhi, Haryana, Punjab, Himachal Pradesh, Jammu & Kashmir, Rajasthan, Uttar Pradesh and Uttarakhand, the survey found that 72 of the respondents expected the GDP growth to be within a range of 5 to 7 percent.

In a similar survey undertaken in April-November 2008-09, about 48.5% respondents had expected the GDP growth to be below 7 percent but in the recent survey 86 % expect the GDP growth to fall below 7 percent, said a CII spokesman.

“This indicates a growing convergence towards the view that the Indian economy would witness some moderation in growth rates in the wake of the global slowdown,” he said.

On inflation 87% of the respondents expect inflation to be above 2% in 2009-10 and rule out possibilities of sustained deflation. In the face of global slowdown, 96% respondents expect a turnaround only in the second half of 2009-10 or beyond.

Fears expressed by the respondents were slackening consumer demand followed by global economic instability, currency risks and high interest rates.

Priorities held out include government action on fiscal measures to stimulate demand, bringing down interest rates and ensuring a stable rupee.

The survey also look at expectations about various elements that build up business confidence showed encouraging results with 33% expecting an increase in investments during the current six months.

Capacity Utilization was expected to improve with 55% respondents expecting a capacity utilization of more than 75 percent. In the previous survey only 40% had expected good capacity utilization.

Against 39 % respondents who reported an increase in sales in the last survey, 62 % respondents expected sales to increase in the current survey.

Outlook for exports, crucial for the country’s economic recovery, seemed to be improved much more for the current six months than what was seen in the last survey, the CII spokesman stated.

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