- News>
- Economy
No economic upturn until end of 2001-02: CII
The Confederation of Indian Industry (CII), on Sunday painted a gloomy picture of the economy with no major upturn until the end of 2001-02 and said it will not change its forecast unless it sees much more of action on the part of the government on the reform agenda.
The Confederation of Indian Industry (CII), on Sunday painted a gloomy picture of the economy with no major upturn until the end of 2001-02 and said it will not change its forecast unless it sees much more of action on the part of the government on the reform agenda.
Pegging the upper growth rate for the current year at 5.25 per cent, the CII said its assessment of the reversal of the slowdown gripping the economy was on account of the domestic factors and global outlook and the state of economic governance at the Centre and states.
This forecast can be proved delightfully wrong, if the government refocuses itself and puts all its energy pushing and implementing reforms , CII said in a paper titled state of the economy, which it said it intends to make a quarterly affair. The book also analyses the state of the capital markets, banking system, external sector and a brief overview of the corporate performance.
The chamber forecast is somewhat lower than the revised forecast of 5.6 per cent of the capital-based National Council of Applied Economic Research (NCAER). Noting that there had been little reforms so far, CII said even if there is a flurry of reforms in the second half of the year, it is unlikely that their effect will be evident until the first of 2002-03. That has been usual and there is no reason why it should be different this time, the survey said.
Even with good monsoons and a healthy five per cent agricultural growth for 2001-02, CII said, its contribution will be only 1.25 per cent to GDP growth.
And even if agriculture performs well, its effect on industry through a demand pull will take by four to six months to be visible. Therefore, we do not expect a good monsoon driven growth in the secondary sector until the winter harvests, that is after January 2002. “Given the present state of the industrial sector, we forecast secondary sector growth at three per cent. Since the secondary sector accounts for a quarter of India`s GDP, the contribution due to this is forecast at 0.75 per cent”, the survey said. The survey scaled services sector growth for 2001-02 at 6.5 per cent --which is 1.2 percentage point below the 2000-01 figure. With service accounting for half of the country`s GDP, its contribution will be 3.25 per cent.
The sector, which in the 1990 was a source of growth, is unlikely to grow at eight per cent plus in a general environment of lack of demand, said the survey.
Bureau Report
This forecast can be proved delightfully wrong, if the government refocuses itself and puts all its energy pushing and implementing reforms , CII said in a paper titled state of the economy, which it said it intends to make a quarterly affair. The book also analyses the state of the capital markets, banking system, external sector and a brief overview of the corporate performance.
The chamber forecast is somewhat lower than the revised forecast of 5.6 per cent of the capital-based National Council of Applied Economic Research (NCAER). Noting that there had been little reforms so far, CII said even if there is a flurry of reforms in the second half of the year, it is unlikely that their effect will be evident until the first of 2002-03. That has been usual and there is no reason why it should be different this time, the survey said.
Even with good monsoons and a healthy five per cent agricultural growth for 2001-02, CII said, its contribution will be only 1.25 per cent to GDP growth.
And even if agriculture performs well, its effect on industry through a demand pull will take by four to six months to be visible. Therefore, we do not expect a good monsoon driven growth in the secondary sector until the winter harvests, that is after January 2002. “Given the present state of the industrial sector, we forecast secondary sector growth at three per cent. Since the secondary sector accounts for a quarter of India`s GDP, the contribution due to this is forecast at 0.75 per cent”, the survey said. The survey scaled services sector growth for 2001-02 at 6.5 per cent --which is 1.2 percentage point below the 2000-01 figure. With service accounting for half of the country`s GDP, its contribution will be 3.25 per cent.
The sector, which in the 1990 was a source of growth, is unlikely to grow at eight per cent plus in a general environment of lack of demand, said the survey.
Bureau Report