Economy near bottom-out levels: Survey
In the midst of a gloomy GDP growth scenario, an ASSOCHAM business confidence survey has indicated that the slowdown is about to bottom out, but it may get a little worse before it gets better in the last quarter of the current financial year.
The immediate drivers for revival of business confidence would be end of political impasse in Parliament, low base for comparison and revival in the core sector infrastructure industries, highlights a survey titled 'Business Confidence of India Inc.' released by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
An overwhelming majority of the 76 per cent of the CEOs and CFOs surveyed said that the situation may get a little worse before it gets better since the problems of high interest rates, high inflation and a double dip recession in several key European economies would have a bearing on the economies of the emerging economies, India included.
They said the overall GDP growth for the current financial year as a whole, would be between 5 to 5.5 per cent.
"We may be heading for a decade low of growth, but the turnaround is visible in the next six -seven months," ASSOCHAM President Rajkumar Dhoot said.
Dhoot, himself a Rajya Sabha MP, said end of impasse in Parliament over FDI in multi-brand in retail has displayed a maturity of India's political system to debate the most contentious issues and then choose the path best suited for the country.
"Let there be an enlightened debate on some of the most contentious issues including foreign direct investment in multi-brand retail. But once, an issue is clinched, we expect a bi-partisan support for the national economy," said the ASSOCHAM chief.
In fact, even when hectic efforts were on between the government and the opposition parties to resolve the logjam in Parliament the stock markets and the investors picked up early signs.
"They have already given thumbs up to the Indian market and like the domino effect, it will now build on itself," he added.
The ASSOCHAM is in agreement with the global agencies and influential players like the Goldman Sachs and the Moody's to see bottoming out of the Indian economy, which will surely now see an upturn as a number of factors will combine to give it a leg-up.
"Though Europe continues to battle its economic woes, the situation in the US is not too much of a worry despite the concerns over so-called fiscal cliff," the chamber survey pointed out.
It said even the exports would show a turnaround from the third quarter-end and from January.
"Let us not forget our export basket has become well-spread and the trade within Asia, which is not that much affected, has been increasing. Some of the economies within Asia like China, Japan, South Korea, and South East Asia have themselves have emerged as big consumers, thus providing a cushion to the deceleration of trade in the western countries," said the ASSOCHAM survey.
After showing a nine-year low growth of 6.5 per cent in the financial year 2011-12,the economy grew by 5.5 per cent in the first quarter and 5.3 per cent in the second quarter. The sectors like manufacturing remain areas of big concerns. There would be some lag before growth returns to the factory output.
However, the services and the agriculture sectors have managed well to cope up with the situation and are expected to remain strong helping the country maintain respectable level of economic expansion, the chamber said.