Indian growth sustainable: Survey
According to an Assocham survey the Indian economy has the capacity to absorb 8 to 9% growth.
By PTI |
NEW DELHI: The Indian economy is not overheated and has the capacity to absorb eight to nine per cent growth for a long period, provided the supply side is managed well and domestic savings are encouraged, an Assocham survey has said.
According to the Assocham Business Barometer (ABB), 74 per cent of the 280 CEOs and CMDs surveyed from different segments of industry believed it would be far-fetched to conclude that the economy was stretched.
However, 69 per cent respondents said a continuous caution was required to maintain macro-economic stability so as to maintain pick-up in investment and growth on a sustained basis.
While inflation remained an area of concern for the government and the policy-makers, the root of the inflationary problem lies in the hardening of primary commodity prices.
The contribution of the primary articles with a weight of 22.03 per cent in the WPI basket was 28.8 per cent in the 34 weeks until November 18. Major contribution to inflation was made by cereals; pulses; potatoes, milk, condiments and spices and minerals, the chamber said.
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Over 88 per cent of the respondents said in the short-term, the supply of the primary products could be augmented by measures like reduction in customs duty and improving production of these essential commodities by giving a boost to agriculture.However, 21 per cent of the respondents did express fear of the economy getting overheated. They argued that besides the mounting problem of inflation, the mismatch between investments and savings could lead to the problem of overheating.
The Reserve Bank's measures to curb excess liquidity was a welcome move and it should not do anything that can stunt growth, 24 per cent of the respondents said.
Over 89 per cent of them said they saw interest rates further going up and this would have an adverse impact on the industrial growth. The RBI should strike a balance between the growth and inflationary expectations, they said.
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