Business Standard

Tuesday, December 24, 2024 | 10:36 AM ISTEN Hindi

Notification Icon
userprofile IconSearch

India Inc confidence does not show early revival: CII

Confidence Index marginally down in Q1, 2013-14 against previous quarter

BS Reporter New Delhi
A recent survey by the Confederation of Indian Industry (CII) has shown that the confidence of India Inc slowed a bit in the first quarter of 2013-14 against the fourth quarter of the previous year. The CII Business Confidence Index (CII-BCI) fell to 51.2 points for the April-June 2013 quarter as compared to 51.3 in the previous quarter.

This is much lower than 55 points during the first quarter of 2012-13 and 62.5 during the April to June quarter of 2011-12.

“This mirrors the air of uncertainty that is still lingering in the industry regarding the present business prospects and also throws into question, the hopes of an early turn-around,” said CII Director General Chandrajit Banerjee.
 

The survey came a few days after the Central Statistics Office (CSO) data showed that India’s gross domestic product (GDP) grew 4.8 per cent in the fourth quarter of 2012-13, only marginally higher than 4.7 per cent in the third quarter. This came amid GDP getting revised downward to 5.1 per cent from the earlier 5.3 per cent for Q4 of 2011-12. For the entire 2012-13, GDP growth stood at a 10-year low of five per cent.  

However, the survey indicated that most of the respondents (47.8 per cent) expect GDP growth to improve and come in a range of six to 6.5 per cent for the current financial year as compared to five per cent in 2012-13. This is in line with the CII’s expectations for GDP to lie between six and 6.4 per cent for the current year. However, in an indication that the downside risks to growth have not abated yet, 36 per cent of the respondents expect GDP to grow below six per cent in the current year.

In the survey, domestic economic and political instability, high level of corruption, infrastructural and institutional shortages emerged as the top-three concerns, while risk from exchange rate volatility was ranked as the lowest concern for businesses at this moment.

As far as WPI inflation is concerned, about 40% respondents expected it to lie above 7% for the current fiscal, way higher than CII’s forecast of 5.5-6.0% for the year. This is however in line with another result of the survey, which showed that most of the respondents (43%) expected crude oil prices to increase in the current year as compared to last fiscal.  Additionally, 33% of firms also expected WPI inflation to lie in a range of 6.5-7.0% for the current year.

The survey revealed that almost 60% of the respondents believed fiscal deficit to lie in a range of 4.5-5.5% of GDP in 2013-14 as against budgeted 4.8% of GDP for the year. However, 23.3% of respondents also saw the fiscal deficit breaching the 5.5% mark in the current fiscal.

On the current account deficit front, the survey did not paint a very rosy picture as well, with majority of the respondent firms (51%) expecting it to lie in a range of 4.0-5.0% of GDP, while 33.3% expected it to exceed 5%. This is way higher than the 2.5-3.0% range deemed sustainable by RBI.

The 83rd Business Outlook Survey is based on responses from 180 members. About 57.1% of the respondents belonged to large-scale firms, while the rest were from the MSME sector.

Majority of the respondents were optimist about improvement in their sales, new orders, exports and value of production in the first quarter from the levels of previous quarter. Further, nearly half (48.3%) of the respondents also expected their capacity utilization to reach as high as 75 -100% in the quarter.

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Jun 03 2013 | 12:38 AM IST

Explore News