CEOs upbeat on India's GDP growth, but worried about inflation

A majority of CEOs attending CII's National Council meeting today expressed confidence about the Indian economy achieving a growth rate of 8.5-9.0 per cent in the current fiscal even as they said rising inflation was a cause for concern.

About 56.4 per cent of the CEOs polled said they expected India's GDP growth in the current year (2010-11) to be in the range of 8.5-9.0 per cent, 38.5 per cent expected GDP to grow at a more moderate rate of 8.0-8.5 per cent and 5.1 per cent expected an even higher rate of 9.0-9.5 per cent.

On inflation, a majority of 64.1 per cent of respondents
Said they expected headline number to stay above 6.5 per cent by March 2011, while 28.2 per cent expected it to moderate to 6.0-6.5 per cent and 7.7 per cent expected a lower range of 5.5-6.0 per cent.

This compares with the RBI's expectation of WPI inflation falling to 5.5 per cent by March 2011.

"Businesses are upbeat on the domestic economy despite the global uncertainties and are maintaining their investment momentum," CII president Hari Bhartia said.

In view of inflation remaining high and the economy reporting robust growth rates, many expect the RBI to hike policy rates again at the first quarter review of monetary policy due tomorrow. This, the CEOs fear, would raise lending rates, which in turn would put pressure on their margins.