Our Bureau

New Delhi , June 5

THE CII expects agricultural output to increase by about three per cent this fiscal compared to one per cent in the previous fiscal.

Higher growth in agriculture is likely to be driven by projection of normal southwest monsoon; improvement in distribution of quality certified seeds; higher than targeted growth in commercial bank credit to agriculture; and a favourable trend reversal in the gross capital formation in agriculture, the chamber said in a release.

Based on strong growth sentiments reported by members surveyed by the CII and a majority of sector associations reporting positive outlook, the chamber has forecast industrial growth at 8.1 per cent for 2005-06.

It has forecast overall GDP growth rate of 7.2 per cent for the year.

According to the `State of the Economy', 2004-05 witnessed broad-based industrial growth with index of industrial production rising by eight per cent compared to seven per cent in 2003-04.

This was based on robust capacity expansion as evidenced by an increase of 12.6 per cent in the index of industrial production for capital goods in conjunction with a near 24 per cent rise in imports of machinery and equipment.

The RBI projection for growth of non-food credit is 19 per cent for 2005-06, significantly lower than 26.5 per cent growth in 2004-05, and may result in a lower investment demand by the private sector.

The report said that the services sector has maintained its buoyancy in 2004-05 for the third year in a row.

Tele-density has increased from 7.17 per cent at the end of 2003-04 to 9.08 per cent at the end of 2004-05, with the number of mobile subscribers growing by 55 per cent.

The IT services and software sector is estimated to grow by 28.9 per cent for 2004-05, with exports expected to record a growth of 32.3 per cent.

The CII report predicts a strong services sector performance with 8.3 per cent growth in 2005-06.

On the external front, the report states that in 2004-05, exports growth stood at a remarkable 24 per cent, with imports growing even more strongly by 36 per cent.

According to the report, exports to China and Hong Kong are increasing at a consistently high rate.

This has resulted in China and Hong Kong together accounting for 9.7 per cent of total exports, displacing the UAE (8.7 per cent) and second only to the US, which has a share of 17.5 per cent in India's exports.

However, the heavy concentration of primary commodities, especially iron ore, points to a degree of vulnerability in India's exports to China.

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