Leading think tank National Council of Applied Economic Research (NCAER) is hopeful of India registering 6.9 percent economic growth during fiscal 2004-05 despite various setbacks.

During 2003-04, India registered a high 8.5 percent growth buoyed by a good monsoon and consequent high farm growth together with good growth in the industrial and services sectors.

"The Indian economy, in spite of shocks like a deficient monsoon, oil price rise and the tsunami, is likely to witness a growth in Gross Domestic Product (GDP) of 6.9 percent in financial year 2004-05," NCAER said in its "Business expectation survey April 2005" released Friday.

The resilience of the economy, the think tank said, was "a reflection of the economy's inherent strength, built up over time in response to the reforms that were initiated in early the 1990s".

The increasing efficiency and competitiveness of domestic producers, liberalised trade and deregulated interest rate regime have all contributed significantly to the current macro-economic stability and industrial growth, said the report.

The Business Confidence Index (BCI) reflected this with a half percentage point rise to 143.1 in April 2005 compared to January 2005.

"This is the highest level the BCI has attained since December 1995," the report noted.

The upswing in business sentiment was attributed to industrial recovery.

Data for 11 months of 2004-05 (April-February) showed that "overall industrial growth of 8.1 percent, coupled with manufacturing growth of 8.7 percent, may not be the best the industry has achieved, but it is significant in that it has been achieved on a reasonably high base of growth for the same period in fiscal 2003-04".

Even more significant was its structure and spread across diverse segments like automobiles, industrial furnaces, phosphetic fertilisers, cement and edible oil.

The growth in the capital goods sector, led by machinery and machine tool segments, was an indication that in spite of indications of a reversal in interest rate, the pick up in investment had not slackened.

"This suggests that capital formation is finally taking place in the industrial sector after a gap of about eight years," the report pointed out. "The corporate balance sheet currently is significantly stronger than it was in the 1990s."

The rise in railway freight movement by 7.8 percent and port handling by 10.9 percent during April-February and the virtual boom in telecommunications with the tele-density reaching 9.08 by the end of March 2005 are all pointers to the new buoyancy in business expectations, said the NCAER.

--Indo-Asian News Service