Indian industry expects the economy to grow by over 8 per cent during 2010-11, mainly due to rise in capital investment and capacity utilisation, a Confederation of Indian Industry survey released on Sunday said.
"A majority of respondents (59 per cent) expect GDP growth rate to be above 8.0 per cent...," the CII's 74th Business Outlook Survey for October-December quarter based on responses of 150 companies said.
The Indian government has projected the economy to grow between 8.5 and 8.75 per cent this fiscal. The GDP recorded 8.8 per cent growth in the first quarter of this fiscal.
With GDP clocking high growth, over 60 per cent of the respondents expect an increase in their capacity expansion during the October-December period over the previous quarter.
About three-fourth of them see capacity utilisation to exceed 75 per cent, the survey said.
However, the industry optimism for October-December, fell by 1.4 points to 66.2 per cent, compared to an increase of 1.5 points during the April-September period, as inflationary conditions and high interest rates weigh on their minds.
"There has been some moderation in business confidence reflecting concerns about the outlook for the current quarter," CII Director General Chandrajit Banerjee said.
The top concerns of respondents were -- inflationary conditions, slack consumer demand, cost and availability of labour and high interest rates, the survey said.
On inflation, 70 per cent of the respondents expect average inflation for 2010-11 to be above 6 per cent.
Inflation rose to 8.62 per cent in September on higher prices of essential items from 8.51 per cent in August.
In a bid to rein in demand by checking consumer spending, the apex bank RBI has raised short term rates five times this year.
The survey also revealed that 94 per cent feel that the cost of credit will not fall in October-December 2010.
With exports likely to cross the USD 200-billion target for 2010-11, about 56 per cent of the participants expect the volume of outwards shipments to increase.