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India Inc's business confidence low: Survey

FICCI'S survey says the growth outlook has dropped from significantly optimistic to moderately optimistic.

india Updated: Aug 17, 2006 18:51 IST

Rising global crude oil prices along with hardening interest rates in the domestic market have taken a toll on India Inc's growth outlook in the first quarter of the current fiscal.

According to industry body FICCI's quarterly business confidence survey released on Thursday, the growth outlook dropped from 'significantly optimistic' to 'moderately optimistic' in all operational parameters like sales, profits, investments, employment and exports in the quarter.

The number of respondents who felt the country's overall economic conditions have increased from a level of moderately to substantially better, also declined to 58 per cent compared to 85 per cent in the last survey, FICCI said.

The projections of the survey for the next six months are also not as exciting as expected with almost 36 per cent of the respondents expecting no improvement in overall economic conditions and 12 per cent expecting it to deteriorate.

As many as 60 per cent of the respondents were satisfied with the current performance of their industry sectors and rated it as substantially better which dipped 17 per cent from the last survey where 77 per cent of the respondents were satisfied with the growth levels.

The industry's outlook on sales dipped with 70 per cent of the respondents expecting higher or much higher sales in the next six months as compared to a level of 76 per cent of respondents with positive outlook in the last survey, FICCI said.

Percentage of respondents expecting better profits in the next six months dipped to 53 per cent in this quarter from 65 per cent in the last survey.

The outlook on investment suffered a decline as 50 per cent of the respondents predicted increased investments in the coming six months as compared to 65 per cent in the last survey. 

FICCI said constraints have severely hit the confidence levels of the service sector which dropped to 60 per cent from a level of 88 per cent in the corresponding period.

A similar slide was visible in the confidence levels of small scale industries where only 53 per cent respondents were confident of achieving a stable growth compared to 63 per cent in the year ago period and 72 per cent in the Q4 of the previous fiscal.

Heavy industry, although the most optimistic amongst the three sectors, has also seen a fall in the proportion of respondents reporting improved performance in the quarter to 60 per cent as compared to 79 per cent in the last quarter of the previous fiscal.