(India Infoline News Service )Mumbai Jul 27, 2009 17:26
The Industrial Outlook Survey of the RBI conducted in April-May 2009 shows a turnaround in the business sentiment
The results of t
he latest round of survey of Professional Forecasters’ conducted by the Reserve Bank of India (RBI) in June 2009 indicate overall (median) GDP growth rate for 2009-10 at 6.5%, which is higher from 5.7% that was reported through the findings of the earlier survey conducted in March 2009.
The Industrial Outlook Survey of the RBI conducted in April-May 2009 shows a turnaround in the business sentiment. For the manufacturing companies in the private sector, the business expectations indices based on an “assessment for April-June 2009” and on “expectations for July-September 2009” improved sharply by 20.3% and 14%, respectively, over the previous quarter, when these indices had recorded their lowest levels since the inception of the survey.
The growth outlook for 2009-10 needs to be assessed in the context of indications emerging from lead indicators so far, the RBI said. Indicators such as the higher growth in core infrastructure sector, positive growth in IIP, gradual revival in demand for non-food credit, improving performance of the corporate sector in terms of both sales and profitability, gradual return of risk appetite in the capital market, more optimistic business expectations and forecasts as reflected in the RBI’s surveys could be viewed as signs of recovery from the slowdown, the central bank said.
However, there are other factors which may dampen the growth outlook such as the delayed progress of monsoon, decline in exports due to the persistence of global recession, lagged impact of the negative growth in manufacturing in the last quarter of 2008-09 on services demand, negative growth in capital goods, decline in the production of commercial vehicles, and an accelerated fall in import growth suggesting dampened demand conditions, the RBI said.
India’s structural growth impulses continue to remain strong, given the high domestic saving rate, sound financial system, and growth supportive macroeconomic policy environment, the RBI said. Domestic deceleration in demand and persistent uncertainty in the global conditions, however, operate as the major drag on a faster recovery, it added. Early indications for India suggest that the revival impulses need to strengthen further to boost the consumer and investor confidence, which could then set off a positive feedback loop to lift the growth momentum over time, the RBI said.