Rising inflation, which may up go up further, has shaken India's business confidence with 64 per cent of industry representatives claiming the current situation to be worse than what it was six months ago.
"Manufacturing inflation will go up in the months ahead and it would be a persistent trend throughout 2008," the Federation of Indian Chamber of Commerce and Industry (FICCI) said after conducting a survey of business confidence which has deteriorated in the last six months.
Manufacturing has a weightage of 63.75 per cent in the whole price index. Inflation touched a 13-year high of 11.42 per cent for the week ended June 14.
The results of the survey conducted between May and June showed that performance of the economy, industry and at the firm level has further weakened.
"The Current Conditions Index is at its lowest level because of moderation in growth, rise in inflation and input costs," the chamber said. The pressure on industry on account of rising interest and input costs has breached the absorptive capacity for many companies, that are being forced to revise prices upward.
"India Inc has struck a note of nervous optimism and expressed deep concern at the current state of the economy," it said. Assessment of current industry performance shows that nearly 38 per cent of the companies witnessed deterioration in performance over the last six months. This figure stood at 29 per cent in the last survey.