Economy to grow at 7 percent, no rate cut before April: Ficci

January 23rd, 2012 - 3:30 pm ICT by IANS  

Mumbai, Jan 23 (IANS) India Inc expects the country’s gross domestic product to log a growth of just about 7 percent with no hope of an interest rate cut before April, a survey by the Federation of Indian Chambers of Commerce and Industry (Ficci) released Monday said.

“Thirty-three percent of the respondents felt that the economy would grow between 6.5-6.9 percent in 2011-12 with the remaining 67 percent feeling that the growth rate would touch 7 percent,” said Ficci’s Economic Outlook Survey.

“There were no respondents who believed that the economy would log in a growth rate higher than 7.5 percent in this fiscal,” it added.

The survey was conducted among member associations of Ficci and amongst individual companies during the month of December and January. Banking and financial services along with manufacturing together accounted for more than half of the total responses.

The companies who responded to the survey were also not hopeful of any easing in key interest rates by the Reserve Bank of India in its third quarter review of the monetary policy to be conducted Tuesday.

“Notwithstanding the decline in inflation a majority of the respondents still believe that RBI may not go for cut in repo rate in its Jan 24 monetary policy announcement,” said Ficci.

The cash reserve ratio defines the amount banks must deposit with the central bank. The ratio is tweaked to manage the liquidity in the market.

“As far as CRR (cash reserve ratio) cut is concerned, the consensus is the RBI may continue to take recourse to OMO (open market operations) for any liquidity mismatch, even though greater number of respondents believe CRR cut may be a better option as compared to repo rate cut,” it added.

Inflation, another main worry in the last year, was expected to be around 7 percent by end of March. In the financial year 2012-13, the companies expected inflation to come down to 6.5 percent.

As per latest data, overall inflation, based on the wholesale price index (WPI), was down to a two-year low of 7.47 percent in December 2011, mainly because of constant decline in prices of food items.

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