Gloomy CII Business Outlook does not spare any sector
THE 48th Business Outlook of Confederation of Indian Industry (CII), which paints a gloomy picture of the economy in the second half of the current financial year, reveals that business pessimism is not confined to a few areas but is shared by all sectors of industry, including capital goods, basic goods, intermediate goods, consumer goods and the services sector.
The findings in the consumer goods segment durable as well as non-durable show the percentage of respondents expecting lower business has gone up to 54 from 17 per cent in the last survey.
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Only 27 per cent foresee more business during the next six months, compared with 47 per cent in the last survey. The percentage of respondents who expect the same trends to continue has dropped from 36 to 19 per cent.
Twenty-four per cent identified orders as a constraint, 20 per cent pointed at delays in payments, 16 per cent credit or finance, 13 per cent domestic competition, 10 per cent each international competition and duty structure and 5 per cent plan capacity. Power (39 per cent), roads (27 per cent), railways (11 per cent), telecommunications (9 per cent), ports and airways (7 per cent each) are seen as infrastructure constraints.
The latest survey covers 211 CII members across a spectrum of industry groups in both the public and private sectors, against 410 companies covered in the last survey. It relates to the actual performance of Indian industry during October-March 1996-97 as well as April-September 1997, and the forecast for October-March 1997-98.
CII normally conducts the surveys in June and November. The current survey was conducted as a quick-sample exercise to determine whether a business revival is in the offing.
However, the exports outlook is upbeat, with the percentage of respondents expecting an increase in volume rising to 71 from 53 per cent in the last survey. Only 12 per cent expect a fall, against 36 per cent in the last survey. The percentage of those expecting no change has gone up from 11 to 17 per cent.
The value of exports is expected to rise by 62 per cent of the respondents against 53 per cent in the last survey, 22 per cent expect a lower export value (31 per cent in the last survey) and the percentage of those expecting no change remains unchanged at 16 per cent.
Prices (22 per cent), international competition (21 per cent), cost and availability of finance (14 per cent), procedural bottlenecks (14 per cent), delays in clearances (13 per cent) and delivery dates (6 per cent) are seen as some of the constraints faced by exporters of consumer goods. With regard to production growth, 16 per cent see it between 0-5 per cent, 26 per cent between 5-10 per cent, 54 per cent above 10 per cent and 4 per cent expect a negative growth during 1997-98. Forty-three per cent of the respondents expect lower investment in plant and machinery while 57 per cent expect more investment during the next 12 months.
Seventy per cent of the respondents expect the order position to improve, 19 per cent expect a slow-down while 11 per cent foresee the same trend. The respective figures were 50, 36 and 6 per cent in the last survey.
Sixty-five per cent expect the value of output to go up, 15 per cent foresee a down-trend and 20 per cent expect the current trends to continue. The respective figures were 57 per cent, 23 per cent and 20 per cent in the last survey.