 "Optimism up in CII, Ficci surveys")
Both surveys covered about 150 companies. The CII one also showed companies were more optimistic about their own performance. The Ficci one showed only marginal improvement. The CII survey is for the second quarter of the current financial year. That from Ficci was for the second quarter.
The survey conducted by CII showed its Business Confidence Index (BCI) rose to a three-year high of 57.4 points in the quarter under review against 53.7 in the previous one. The BCI had been at an all-time low of 45.7 in the second quarter of 2013-14. Before this, the BCI was higher at 62.5 points only in the first quarter of 2011-12.
A BCI over 50 points shows positive confidence, while one below that means it is weak.
The second quarter of FY15, covered by CII, entirely represents the Modi government in office. The first quarter, reviewed by Ficci, partly represents the period of the new regime. The Bharatiya Janata Party-led government took the oath of office on May 26.
As such, CII director-general Chandrajit Banerjee attributed the index surge to the new government. “The determination shown at the Centre to provide an impetus to growth, along with reviving the ‘feel good factor’, has sent the index soaring for the second quarter in a row,” he said.
It must be ensured that this momentum is maintained, he said.
The Ficci survey did not give any overt credit to the Modi government but specifically asked the respondents about the ‘Make in India’ vision of the new prime minister. The respondents said the sectors in question— engineering, iron and steel, electrical and electronic products, pharmaceuticals, medical equipment, automobiles and auto components, food processing and agro-based industries, textiles and defence equipment— should be made to ramp up manufacturing capacities.
Respondents were also asked by Ficci about the cabinet’s recent approval to the proposal to amend three labour laws — Apprenticeship Act, Factories Act and Labour Act. A majority of the companies said the laws needed to be made industry-friendly and transparent. They said due importance should be given to the welfare of employees and employers.
The highest percentage (41 per cent) of the respondents in the CII survey expected the gross domestic product to grow by 5-5.5 per cent. About 30 per cent pegged it at 5.5-6 per cent. This is in line with the Reserve Bank’s projections of five to six per cent, with the central estimate coming at 5.5 per cent. The economy rose 5.7 per cent in the first quarter of the current financial year, after below-five per cent expansion in 2012-13 and 2013-14.
As many as 93 per cent of those covered in the Ficci survey said they expected the overall economic situation to be better over the next six months.
The expectation of higher economic growth in the current financial year is rooted in optimism about the overall demand situation in the CII survey. A significant 77 per cent of respondents expected their sales to increase in the July-September quarter, much higher than 50 per cent in the previous quarter. Similarly, 49 per cent of the respondents expected their export orders to increase in the second quarter, compared to 39 per cent in the previous one.
However, in the Ficci survey, the improvement in these parameters was felt to be marginal. As many as 64 per cent of the respondents felt that sales would be higher in the next six months, compared to 62 per cent in the previous one. And, 45 per cent of the companies in the first quarter felt their exports would be higher in the next six months, against 41 per cent in the previous quarter.