Corporate sentiment towards Indian business climate and future expectations have fallen to pre-Narendra Modi levels according to a Deutsche-Borse survey.
The MNI India Business Sentiment Indicator — a gauge of the current sentiment among BSE listed companies — fell 2.5% to 62.3 in May from 63.9 in April.
“The May report confirms that the trend in business activity is down, with overall sentiment, output and orders all continuing to fall from the Q4 peak,” said Philip Uglow, chief economist of MNI Indicators.
This is the lowest level for the index since April 2014. Along with a decline in output and orders, it points to a fall in business activity.
“Production declined to a near-two-year low in May. Evidence from the survey suggested that Narendra Modi’s ambitious ‘Make in India’ project is failing to get off the ground,” said the report.
Companies, according to the report, saw a significant weakening in both domestic and export orders. The index for new orders fell sharply to 57.1 in May 2015, the lowest since May 2013. Export orders shrank to 53.6, the weakest since June 2013.
On inflation, it said, weak demand and competition have capped prices.
“Along with the continued soft official data on production and exports and the low level of inflation, we expect the Reserve Bank of India to cut rates further at the June-2 monetary meeting,” said Uglow.