The Hindu Business Line : CII sees all-round growth

THE Confederation of Indian Industry (CII), in its state of the economy presentation for the quarter ended December 2003, has said that there was strong growth in all components of the Gross Domestic Product (GDP).

In a statement, the chamber said that the new year began on a bullish note as the data showed positive trends in the economy, boosting confidence among investors, policy makers and commentators.

The performance of agriculture, industry and services was strong, but growth in the services sector was significantly above the trend.

Besides, the growth rate as per the Index of Industrial Production (IIP) also picked up to 7.4 per cent in November compared to 5.4 per cent in the previous month.

Industrial recovery, which began in the second quarter of 2002-03, was yet to peak and growth rates are expected to pick up further over the year 2004.

In the previous quarterly report, CII had forecast the GDP growth for 2003-04 at 7.2 per cent.

However, in view of the strong performance in the services sector, the estimate was revised to 7.8 per cent.

The chamber expects overall growth in the second half to be higher, while in 2004-05, the industry and services are expected to continue on their strong performance path.

Besides, given that the domestic investment cycle is turning for the better and that international growth is on an upswing, positive factors favouring growth currently far outweigh the risks.

CII's preliminary estimates for GDP growth in 2004-05 is 6.7 per cent, which it feels is conservative given that there is an upside for industrial growth depending on the extent to which investment spending picks up.

The chamber said that an improvement in the quality of the deficit is also apparent. While revenue to GDP ratios have improved, the Government's Plan expenditure has not been compromised.

It added that the balance of payments data for the first half of the current year shows that with imports rising sharply and export growth slowing down, the surplus on the current account has declined.

"Going forward, the current trends of strong capital and invisible inflows are likely to continue."

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