Federation of Indian Chambers of Commerce and Industry expects the economic growth rate in the current fiscal to dip to 6.6-6.8 per cent and pitched for immediate policy initiatives by the government to arrest the slowdown.
"The gross domestic product growth in the current fiscal should be 6.6-6.8 per cent, with significant downside risks", Ficci said in its Economy Watch. The GDP growth was 8.5 per cent in 2010-11.
Attributing the decline to various global and domestic factors, especially poor performance of the manufacturing sector, the chamber called for 'immediate policy intervention' to deal with the situation.
The government, especially Finance Ministry, has been holding consultations with the industry on steps to be taken in the next budget to boost growth.
In view of the impact of global crisis on the Indian economy, the government has lowered the growth projection for current fiscal to 7.25-7.75 per cent from about 9 per cent estimated in
February.
Ficci further said that economic growth in the current fiscal can slip to 6.5 per cent in case of deceleration in industrial growth to below 3.5 per cent in 2011-12.
The index of industrial production during October turned negative recording a decline of 5.1 per cent, the lowest in the last two years.
Ficci further said that 2012-13 was 'unlikely to be significantly better with prospects of global economic meltdown looming large.'
The chamber expressed hope that the RBI in its policy review on Friday would reverse the tight monetary stance which it followed since March 2010 to tame rising inflation.
"With the global commodity prices on a downward trend, reflecting weakening external demand, there is an increasing possibility of reversal of policy stance by the RBI going forward", Ficci said.
As regards the inflation, which has started showing declining trend, it said, "the only point of concern. . . is weakening rupee that may act as drag on imported inflation.
"Subsequently, the RBI may continue to smoothen the volatility in the forex market".