NEW DELHI, Nov 23: Low business confidence and lack of proper infrastructural support are likely to cast a dampening effect on the economy for some more time, an apex industry body has said.

The Associated Chambers of Commerce and Industry (Assocham) said the present slowdown in the economy is also a direct result of the indecisiveness of government and called for major policy imperatives to achieve a long- term sustained growth rate.

In its mid-year review of Indian economy, the chamber has said that the overall gross domestic product is likely to be in the range of 5.2 per cent to 5.5 per cent provided services sector maintains its growth tempo.

Recently, the RBI scaled down its GDP projection to six per cent from its earlier optimistic estimate of around six to seven per cent.

Expressing concern over the ballooning fiscal deficit, sluggish domestic demand and widening current account deficit, Assocham said `it seems unlikely that the industrial sector will be able to experience the growth surge of 1995-96 in the second half of 1997-98.'

Assocham said the industrial sector has started showing distinct signs of recovery with registering a 6.4 per cent growth during April-July 1997-98, but the recovery is not broadbased as it is concentrated essentially in textile and fertiliser industries in the manufacturing industry and in electricity generation.

`With the industry on a recovery trail, imports are expected to rise and improvement in international demand should improve export prospects,' the chamber said but ruled out a double digit growth in exports for 1997-98.Sluggish domestic demand, dormant capital market and poor credit offtake also affected industrial investments from the second half of 1996-97 until the first four months of this year.

The performance of the industrial sector would depend primarily on a boost in demand from the agricultural sector.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.