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`Cost pressures make Q1 growth unsustainable'

Our Bureau

NEW DELHI, Sept. 6

COST pressure in the form of high petroleum product prices and increased wage outgo due to higher inflation have put a question mark over whether the strong corporate performance in the first quarter of the current fiscal can be sustained, according to a study by the Associated Chambers of Commerce and Industry of India (Assocham).

The chamber has expressed concern over the substantial slowdown in incremental rural incomes in 1999-2000 (Rs. 25,000 crores compared to Rs. 80,000 crores in the previous year), absence of investment-led demand push and higher inflation, leading to lower expansion of real incomes.

With the industrial sector besieged with lack of new growth drivers, weakening consumption demand and sluggish investments, the chamber has said that the economic outlook for the current fiscal (2000-01) appears far from promising with real growth of GDP expected to be around 6.5 per cent.

This was a modest improvement over the 6.4 per cent growth recorded in the previous year, the chamber has said in a statement.