Economy set to grow at over 8%: CII

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New Delhi, Feb 26: Industry chamber CII has projected the economy to grow at over 8% this fiscal in line with quick estimates by the central statistical organisation due to good monsoon and impressive growth in services sector.

However, fiscal and revenue deficit targets are likely to be missed, the chamber said in its latest state of the economy report.

Pointing out that both exports and imports registered a decline in the first three quarters of the current fiscal, the report said major challenge lies in increasing the growth of exports as bringing down the imports growth may not be advisable in view of the capital-intensive nature of imports and high oil prices.

The chamber also said the fear of rupee getting weak does not hold water at the moment since the real effective exchange rate assumed a rising trend during the first nine months of this fiscal.

The projection of 8% plus growth is based on the revised 1999-2000 prices, but on the old series of 1993-94 prices the growth is expected to be in the range of 7.7-8 per cent, close to the forecast by the Reserve Bank of India. During the first half of this fiscal, the economy registered an 8.1% backed by strong performance of manufacturing and services sector, CII said.

A high growth in manufacturing and services sector brought down the share of agriculture in GDP from 18.6% in the first half of 2004-05 to 17.5% in H1 of 2005-06, the report said.

On revenues, it said growth in direct taxes stood at 19% during the first nine months of this fiscal against the target 32% for the entire 2005-06, while indirect taxes showed slightly higher growth of 11.6% against the target of 11.3%.

The growth in direct tax collections for the period as a whole is likely to increase, considering the seasonal pattern of income tax receipts, the chamber said.