India's GDP growth may drop below 6.5%: CII | SupportBiz

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India's GDP growth may drop below 6.5%: CII

The gross domestic product (GDP) growth in 2012-13 is likely to be less than 6.5 percent, an industry body said, adding that the government should announce implementation of another 50 large projects on an urgent basis. "The poll results clearly indicate deteriorating business sentiments and expectations," stated Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII).

"Urgent actions are needed from the government, such as announcements on implementation of another 50 large projects on an urgent basis with all clearances and approvals in place along with a credible third-party monitoring mechanism," he added.

Banerjee also said that a direction towards further opening up of the economy by relaxing FDI limits in civil aviation, defence production and opening up multi-brand retail to foreign direct investment (FDI) will greatly boost global investors' confidence and help arrest further slide of the rupee.

The responses are a result of a snap poll conducted by CII among senior industry leaders. About 43 percent of them expected net sales growth to stagnate or decline during the year 2012-13, while 57 percent expected the bottom line growth to either stagnate or to decline.

On investment plans for expansion, 32 percent revealed the expansion plans in their companies or groups to be at the same level as compared to last year, while 29 percent of them revealed contraction in expansion plans domestically.

On investing abroad, 47 percent said that they would maintain the same levels of investment abroad as in last year, while 43 percent said that they would increase their investments abroad.

On employment of skilled workers, about 50 percent of the senior industry leaders expected hiring activities in their companies to remain stagnant, while 15 percent of them expected decrease in hiring activities.

On the components of the comprehensive revival package, the leaders also said that there should be a cut in repo rate by 100 bps to reduce interest rates, announcement of 25 percent weighted tax deduction on expenditure of companies on 'going green', and clearing 50 large projects for implementation in the next 30 days.

They also suggested a cut in cash reserve ratio by 100 bps to improve liquidity, allowing 25 percent accelerated depreciation for investments in plant and machinery and announcing a clear and quick plan for fiscal consolidation.