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FICCI Economic Outlook Survey April 2010

FICCI Economic Outlook Survey April 2010

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Published by: ramesh29 on Apr 21, 2010
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FICCI Economic Outlook Survey
April 2010
FICCI, Federation House, 1, Tansen Marg, New Delhi
FICCI Economic Outlook Survey – April 2010
About the Survey
The Economic Outlook Survey was conducted during the period March 20, 2010 to April 10, 2010. Aspart of the survey, a structured questionnaire was drawn up and sent to key economists for their inputsand views. 12 economists of repute participated in the survey. These economists largely come from thebanking and financial sector. The sample however also includes economists from industry and researchinstitutions.The economists were asked to provide their
forecast for key macro economic variables for the year2009-10 and 2010-11
as well as for
Quarter 4 (Jan-Mar) of 2009-10 and Quarter 1 (Apr-Jun) of 2010-11
.In addition to these, FICCI sought the views of economists on six topical economic issues –
expectedmonetary policy action by RBI in the forthcoming monetary policy review and potential impact oninterest rates and industry performance; resource mobilization by corporate India for fundinginvestments; how realistic is the Rs. 40,000 crore disinvestment target for 2010-11?; besidesdisinvestment and 3G auction how can government raise more resources in 2010-11?, is the reboundseen in India’s exports sustainable?; and is it time to look at some policy action towards capital flows?
 The feedback received from the participating economists was aggregated and analyzed. The resultsobtained are presented in the following pages.
The findings of the survey represents the views of the leading economists and do not reflect the viewsof FICCI
FICCI Economic Outlook Survey – April 2010
Executive Summary
Annual Forecasts for 2009-10
GDP growth – 7.2 percent
Agriculture and allied activities growth – (-) 0.2 percent
Industry growth – 10.0 percent
Services growth – 8.1 percent
Fiscal Deficit – 6.7 percent of GDP
IIP – 10.5 percent
Bank credit growth – 16.5 percent
Annual Forecasts for 2010-11
GDP growth – 8.4 percent
Agriculture and allied activities growth – 4.0 percent
Industry growth – 9.2 percent
Services growth – 9.3 percent
Fiscal Deficit – 5.8 percent of GDP
IIP – 10.0 percent
WPI inflation rate (End March 2011) – 5.5percent
USD / INR exchange rate (End March 2011) – Rs. 43.25 / USD
Bank credit growth – 19.0 percent
Quarterly Forecasts for Q4 of 2009-10 and Q1 of 2010-11
GDP growth – 8.7 percent (Q4, 2009-10) and 8.9 percent (Q1, 2010-11)
Agriculture and allied activities growth – (-) 0.5 percent (Q4, 2009-10) and 3.0 percent (Q1, 2010-11)
Industry growth – 12.9 percent (Q4, 2009-10) and 11.0 percent (Q1, 2010-11)
Services growth – 8.8 percent (Q4, 2009-10) and 9.2 percent (Q1, 2010-11)
IIP – 15.2 percent (Q4, 2009-10) and 13.0 percent (Q1, 2010-11)
WPI inflation rate – 9.3 percent (Q1, 2010-11)
USD / INR exchange rate – Rs. 44.75 / USD (Q1, 2010-11)
Bank credit growth – 16.6 percent (Q4, 2009-10) and 16.6 percent (Q1, 2010-11)
Economists’ views on
Expected monetary policy action by RBI and potential impact on interest rates and corporateperformance
. Majority of the surveyed economists expect another round of monetary tightening byRBI in the forthcoming monetary policy review. Repo and reverse repo rates are expected to behiked by 25 bps each. CRR could be hiked by up to 50 bps. Majority of the participants also feel thatgiven the comfortable liquidity position in the system, a hike in policy rates by RBI is unlikely to befollowed by an immediate hike in interest rates by banks. Even if banks increase the lending rates,corporates would not see much of an impact on their bottom line as other (non-bank sources) of funds could be substituted for bank funding.

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