India Inc wants the rural rich to be taxed and is overall upbeat on the current and future economic prospects of the country. It feels that the industry will register a solid growth of 8 to 10 per cent.
According to the Federation of Indian Chambers of Commerce and Industry's Business Confidence Survey, the business confidence index has improved by 1.5 points from 27.8 in the last survey conducted in February this year to 29.3 points this month (May).
"Given the sharp increase in capacity utilisation, sales growth and profits, the Indian industry is poised for fresh investments in capacity building and entails a lot of confidence on the functioning and stability of the government," the seventh quarterly
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Business Confidence Survey released by Ficci here yesterday said.
Interestingly 77 per cent of the respondents to the Ficci survey felt that the Bombay Stock Exchange sensitive index (sensex) will stay at around 5000 mark. The corporate sector is also upbeat on the economy and 85 per cent of the respondents expect a GDP growth rate of 6 to 7 per cent and inflation ranging between 3 to 5 per cent despite the hike in fuel prices, the survey said.
However, the corporate world believes that the ballooning fiscal deficit could be the greatest stumbling block for the industry, says the survey as 72 per cent of the 424 respondents pegged the fiscal deficit at between six to seven per cent of the GDP.
Industrial outlook for the immediate future was relatively optimistic compared to the last survey as 70 per cent of the respondents predicted an industrial growth rate of eight to ten per cent for 2000-2001.
On policy measures, the survey has revealed a very positive sentiment and 84 per cent of the respondents are confident that policy measures announced by the government in the form of budget proposals, Exim policy and liberalised investment policy would have a positive impact on the growth of the economy.
On privatisation of the banking sector, 51 per cent of the respondents were in favour but an overwhelming 72 per cent responded negatively to whether the move would serve any purpose if the public character of the banks were retained.
"India Inc expects capacity utilisation to jump by 13 per cent to 83 per cent in the current financial year from 70 per cent, projected in the last survey.
Industry expects the sales figures to grow by 19 per cent as compared to 14 per cent," the survey says.
However, on the impact of the Exim policy, 24 per cent of the companies said they would be badly affected as a result of putting 714 items under open general license whereas 74 per cent were either not sure what impact the policy would have on their industry or felt that there would be no impact at all, the survey revealed.
On whether the replacement of quantitative restrictions with tariff regime would be equally protective or not, 59 per cent of the companies said that tariff regime would not be adequate while 38 per cent felt that this policy of protecting domestic industry would be effective.
Thirty per cent of the respondents believed that the Rupee-exchange rate could go up to Rs 48 to a dollar compared to 20 per cent in the last survey.