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`9% GDP growth uncertain in long run'
Our Bureau
New Delhi
April 4
The 9 per cent GDP growth in the country seems uncertain in the long run, according to the PHD Chamber of Commerce and Industry.
"While the economy may achieve plus 8 per cent this year, largely on account of the notable performance expected in industry and services sectors, there is no convincing evidence regarding the depth of our economic growth," says the chamber.
The obstacles for achieving 9 per cent growth include capacity constraints, inability of domestic output to cope with a surge in demand, inflation and consequent signs of overheating.
The growth would require an investment rate exceeding 35 per cent of GDP. However, India is yet to achieve the requisite savings that are needed for reaching such high investment levels.
According to the chamber, it will take around two years for investments in the pipeline to fructify. In the interim period, growth in industry would come largely from productivity gains and better utilisation of existing capacity, which would prove unequal to sustain 9 per cent growth in the medium term.
Besides, the recent rise in interest rates, a fallout of inflation, is affecting the competitiveness of industry and the impact is felt more on the small scale sector and units operating under thin margins.
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