Economy may grow close to 8 percent in fourth quarter: Assocham


New Delhi : The Indian economy could grow close to 8 percent in the last quarter of the current fiscal, while the overall growth for the year could be between 7.2-7.4 percent, according to an industry lobby.

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“The gross domestic product growth figure could be close to 8 percent for the fourth quarter in view of sustained economic activities in manufacturing, exports showing recoveries and industry intensifying capacity utilization,” said the Associated Chambers of Commerce and Industry of India (Assocham).

Sectors that are expected to make substantial contribution include automobile, telecom, services, engineering and heavy engineering. Even mining and power sector are likely to yield better results between January-March 2010.

Exports would be better than the previous quarter, especially in sectors like gems and jewellery, apparel, textiles, fashion garments and engineering.

“Indications are available that capacity utilization of India Inc, which was shelved in the past, is already reported to be over 72 percent. This will further accelerate to provide enough boost for better GDP growth,” said a statement.

The country’s economy grew 6.1 percent in the first quarter and accelerated by 7.9 percent in the second, before slowing to 6 percent in the quarter ended December 2009.

“Though continuing inflationary pressures on economy which are building up on account of demand factor is a concern, we are of the view that the current fiscal will end up with a GDP growth figure of 7.2 to 7.4 percent,” said Assocham President Swati Piramal.

The unabated rise in inflation led to the Reserve Bank of India increase key policy rates by 25 basis points earlier this month. There are indications that a further increase in policy rates could happen during the quarterly policy review in April.

“In its forthcoming monetary policy, RBI should maintain status-quo in existing rates of cash reserve ratio, repo rate, and reverse repo rate. If a more stringent monetary decision is taken to contain inflation only, there is every possibility that growth momentum could be adversely hit,” said the Assocham statement.