MAJORITY OF INDIA’S TOP CEOS EXPRESS CONFIDENCE OF OVER 8% GROWTH IN 2010-11

Following the Economic Survey projections of GDP growth at 8.5 % in 2010-11, a good majority of CEOs surveyed during the CII National Council Meeting held on 3 March 2010 in New Delhi showed confidence that India will grow between 8-8.5% in 2010-11. About 100 CEOs attended the CII National Council meeting. An overwhelming 92% of the CEOs predict a better outlook for the first quarter (Apr-Jun 2010) as compared to the current quarter (Jan-Mar 2010).

Over the last few days, the Finance Minister has been lauded for presenting a development-oriented Budget maintaining a finely balanced view of allocating increased outlays for priority sectors like Infrastructure and putting more money in the hands of the consumer through the restructuring of the tax slabs, while keeping efforts to reduce the fiscal deficit. Responding to the question on meeting industry expectations, 64% of the CEOs gave a thumbs-up to the Budget saying that it met their expectations.

Reducing the fiscal deficit to sustainable levels where it does not hinder growth and still is able to rein in inflation has been the tight-rope walk for the Finance Minister and wins the confidence of 64% of the respondents who believe that he would be able to achieve the target of reducing the fiscal deficit to 5.5% in 2010-11.

Close on the heels of the Annual Policy Review which will be released by RBI in April 2010, 60% of the respondents feel that that the best response by the RBI would be to maintain status quo on both CRR and Policy rate changes. This comes in the backdrop of RBI raising CRR by 75 basis points from 5.0% to 5.75%, and shifting its stance from ‘managing the crises’ to ‘managing the recovery’ in its Third Quarter Monetary Policy Review. A uniform view that emerged was that inflationary pressure is not expected to subside anytime soon, with 56% of the respondents maintaining that inflation would be in the range of 8.5-9% by end-March 2010.