Indian economy's buoyant performance in the first half of the current fiscal has led the Confederation of Indian Industry (CII) to raise its growth forecast to 8.6 per cent from 8.0 per cent projected earlier - and the growth prospects will be largely insulated from the current global slowdown.
In its latest State of the Economy (SoE) quarterly bulletin issued on Sunday, the leading industry lobby has stated that India recording 9.1 per cent economic growth in the first half of 2006-07 has "set the stage for GDP crossing 8.6 per cent growth mark for the current fiscal".
CII has pointed out that industry and services sector have both grown much faster than expected in the first two quarters.
During the first half (H1) of 2006-07 fiscal, industry recorded a growth of 10.3 per cent while services grew by 10.9 per cent. In both cases the growth was higher than corresponding performance of 7.8 per cent and 10.3 per cent, respectively, in the previous year.
"However, at 1.7 per cent growth in Q2, agriculture is a dampener," states CII.
It has expressed optimism that in the second half (H2) of the fiscal ending March 31, industry is likely to improve its performance from 8.5 per cent to 9.1 per cent.
But services may witness a slight slowdown to 9.7 per cent from 10.2 per cent of H2 2005-06.
The net result is likely to be a slight decline in the growth to 8.2 per cent during H2 2006-07 compared to 8.4 per cent previous year, states the report.
"Despite the likely slowdown in the H2 performance, the growth performance in fiscal 2006-07 is likely to be better than last year," states CII, pointing out that the economy would have fared much better had it not been for the rising inflation and interest rates.
An interesting fact highlighted by the CII report is that India's robust growth is agaisnt a rather modest global performance. "Since the major chunk of Indian production is consumed domestically, the growth prospects of the economy are likely to be largely insulated from the current global slowdown," the CII has stated.