Industry located in north India has expressed subdued optimism about the prospects of business improvement in the region during the next six months, says a business confidence survey of northern states carried out by the PHD Chamber of Commerce and Industry (PHDCCI).
The survey carried out in units located in Punjab, Haryana, Uttar Pradesh, Rajasthan, Delhi and Jammu and Kashmir pointed out that 64 per cent of the respondents expect higher sales during the next six months.
Another 16 per cent perceive the level of sales to remain the same. Only around 20 per cent expect lower sales in the coming months.
More From This Section
Besides, 64 per cent expect their profit margins to either increase or remain the same in the coming fiscal and around 36 per cent anticipate the profits to decline.
According to the survey, the majority (around 54 pe rcent) have described the prospects of business improvement in the next six months as average.
A break up shows that business of companies in many sectors is expected to rise between 6-10 per cent and in some areas it is anticipated that business will rise by more than 20 per cent. The survey also indicates that in a few segments, business might grow beyond 30 per cent.
According to the survey around 35 per cent of the respondents achieved capacity utilization of over 80 per cent.
Around 23 per cent achieved between 61-80 per cent and 26 per cent of the respondents have recorded 41-60 per cent. It is found that 15 per cent recorded a capacity utilization of below 40 per cent.
The survey found infrastructure and power to be the two most important bottlenecks hindering business development.
Industry is of the opinion that the prevalence of bad roads as well as inconsistency and poor quality of power and high power tariff is adversely affecting their cost of operation.
The other three major impediments to business include archaic labour laws, multiplicity of taxes at the state level and intransigent attitude of government and inspector raj.
Some of the other factors which negatively influence industry relate to the worsening law and order situation and corruption.
Surprisingly, the availability of credit has not been mentioned as a major bottleneck while considering business decisions as an overwhelming 88 per cent have felt little difficulty in gaining access to finance.
The survey showed that despite the hurdles which come in the way of doing business in the North, 56 per cent do not agree that they would have done any better if they were located in south India.
Hence they would prefer to continue their operations from their present location rather than relocate their base to south India which is generally perceived to have a more professional environment.
Nevertheless, industry feels that there is an impelling need to focus on internal reform which would revive demand and improve the investment climate in the region. In this context, the respondents have made the following suggestions:
Efforts should be made to effect simplification of procedures by implementing single window clearance and check harassment to industry on account of inspector raj.
Greater accountability of government officials should be ensured and penalty imposed for unjust harassment.
There is need to reduce stamp duty on land/built-up property to augment investment in the housing sector, it said.
Provision of better infrastructure facilities like roads, ICD and power, as well as lowering of power tariff should be imposed.