labels: assocham, economy - general
Economy not overheated: ASSOCHAM news
28 December 2006
New Delhi: According to a Assocham survey of chief executives and chairman and managing directors, the Indian economy is not overheated and has the capacity to absorb 8 to 9 per cent growth for a long period.

According to the Assocham Business Barometer (ABB), 74 per cent of the 280 CEOs and CMDs surveyed from different segments of industry believed the economy was not stretched.

However, 69 per cent felt continuous caution was required to maintain macro-economic stability so as to maintain pick-up in investment and growth on a sustained basis.

While inflation remained an area of concern for the government and the policy-makers, the root of the inflationary problem was in the hardening of primary commodity prices.

The contribution of the primary articles with a weight of 22.03 per cent in the WPI basket was 28.8 per cent in the 34 weeks until November 18. Major contribution to inflation was made by cereals; pulses; potatoes, milk, condiments and spices and minerals, the chamber said.

Over 88 per cent of the respondents said in the short-term, the supply of the primary products could be augmented by measures like reduction in customs duty and improving production of these essential commodities by giving a boost to agriculture.

However, 21 per cent of the respondents did express fear of the economy getting overheated. They argued that besides the mounting problem of inflation, the mismatch between investments and savings could lead to the problem of overheating.

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Economy not overheated: ASSOCHAM