With India's business confidence sinking to a seven-year low and the situation expected to worsen in the next six months, majority of the corporates covered in an industry survey said they are capping fresh hiring.
Close to 88 per cent of 412 firms surveyed by FICCI between November and December this fiscal said that the economic situation has deteriorated over the last six months. Further, 52 per cent feel that the overall economic conditions would "weaken further in the coming six months". As the overall Business Confidence Index dipped to a seven-year low of 37.8 in the second quarter of the fiscal, from about 70 in 2002-03, industry body FICCI Business Confidence Survey said.
The axe has already started on the casual workers. "About 57 per cent of the companies have reported that to bring down costs, they are reducing the number of casual workers," it said.
With exporters facing cancellation of orders and majority of the companies putting brakes on fresh hiring "there is a sense of gloom in corporate boardrooms", the chamber said. "As many as 68 per cent of those surveyed have decided or are looking at the policy not to fill up vacancies for the time-being," the survey said.
Easy credit remains a key issue for India Inc. About 70 per cent of the firms have reported that banks have yet not eased credit disbursal norms despite a slew of measures announced by the Reserve Bank, the chamber said. It said prospects for the key business parameters like sales, profits, investments, selling price, exports and employment look "very bleak".
The survey said that while 30 per cent of the participating companies from the services sector have reported that their near term performance is likely to improve, the corresponding figures for the light industry and heavy industry stand at 25 per cent and 20 per cent respectively. A sizeable 78 per cent of the respondents said that performance of their own firms has deteriorated over the last six months.
"With regard to expectations about firm level performance in the coming six months, the situation looks weak," it said.