2005: A benchmark year for India

Mumbai, Feb 1 | Updated: Feb 2 2006, 05:30am hrs
Citigroup in a report on India in 2006 says that India should consider 2005 as a benchmark year and maintain the momentum.

The report mentions that some of the challenges that can be considered as caution would be oil prices, politics and coal shortage.

On the GDP growth of the country the report hints a positive move of 100 basis points for FY07 (resulting the GDP to cross 8% mark), provided the oil prices come off and growth drivers continue. On the inflation front, Citigroup expects the up trend in inflation to continue due to the phasing out of base effect as well as adjustment in domestic oil prices and expect inflation to average 5-5.5% in FY07.

In wake of pressure on interest rate, ie high credit growth, fiscal deficit, oil prices and their impact on inflation, the group believes the key factor that could offset the negatives are liquidity arising due to dollar inflows as well as the RBIs policy in managing liquidity. It throws light on the aspect that food processing industry, micro financing, and bio-fuel sector will have a trickle-down impact, supported by major initiatives.

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India should maintain the momentum in 2006
Some of the challenges that India can consider as caution would be oil prices, politics and coal shortage
GDP may move 100 basis points in FY07

On the infrastructure segment, the report says that in 2006 the government would renew its thrust on infrastructure development. This would have a multiplier impact across most sectors in the country.

Following the new patent regime and relaxation of procedure for clinical trails the KPO segments, which are likely to be the key beneficiaries are clinical trails, contract research and lab testing.

With India one of the future growth markets, global companies are hiring local engineering and researchers to enable them to tailor products for the growing market, says the report.