The Hindu Business Line : Crisil sees 7 pc growth in economy

Dr Subir Gokarn (right), Executive Director & Chief Economist, Crisil, with Mr Sameer Bhakhri, Director - Business Development, at a seminar on `India: Economic & Business Outlook 2006' in Mumbai on Thursday. - Shashi Ashiwal

Mumbai , March 3

THE Indian economy can achieve 7 per cent growth in the next financial year due to conditions such as foreign investment, initiatives in the direct taxes and money committed to infrastructure, said Mr Subir Gokarn, Executive Director and Chief Economist of Crisil. He was speaking at the seminar on `India 2005-06: Economic Outlook.'

Mr Gokarn said that the factors in favour of India include two years of high growth, a benign inflation, non-agriculture growth, high forex reserves and favourable interest rates.

One of the positives of the Union Budget 2005-06 is that money has been allocated for sectors where it will be definitely utilised, he said. "In infrastructure sector, money has been allocated for airports and roads, where projects are in place and private participation has been put in place. So, good policy is aided by resources," Mr Gokarn said.

As against this, in the social sector, there is a mismatch between intent and capability, Mr Gokarn said. He said, "In health and education money is guaranteed, but it has to be matched with resources to absorb the money."

Mr Gokarn also said that while the Budget may not have an immediate impact on the interest rates, conditions such as growth in the economy and a likely hike in interest rates by the US Federal Reserve, may push up interest rates in India as well.

Mr G. Ravishankar, Director of Crisil, said that sectors such as automobiles, metals and petrochemicals may see a decline in 2005-06.

Hotels will register a growth both in room rates as well as occupancy rates.

While the cement industry will grow due to the incentives for infrastructure, the telecom industry too is poised for growth due to declining tariffs and increase in income.

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