Ficci's business confidence index declines

After registering an 'exceptional' spurt in the third quarter of 2004-05, the Federation of Indian Chambers of Commerce and Industry's (Ficci's) business confidence Index for the fourth quarter is back to the level as seen in the second quarter of the year.

The index showed a decline from 73.4 in the third quarter to 67.5 in the fourth quarter.

Ficci recognised the four major issues of value added tax (VAT), fringe benefit tax (FBT), rising input prices led by crude oil and uncertainty over immediate demand prospects for the drop in confidence index in the fourth quarter against the third quarter.

It, however, refused to endorse this as a trend citing the industry's optimism towards the future. "Our survey which was based on responses from 426 companies across a wide sectoral spread shows 70 per cent of the respondents looking forward to a much better performance in the next six months. I believe that now with the confusion over the VAT and the FBT clearing out. there is no place for pessimism," said Amit Mitra, general secretary Ficci.

The survey which was conducted during the months of March-April 2005 pointed out that corporate India was optimistic about export, investment and employment generation.

"Barring the extraordinary buoyancy which was witnessed in the third quarter, the confidence index has shown a secular rise from 66.7 in the first quarter to 71.6 in the last quarter," said Mitra.

The optimism on the export front is gauged by the fact that approximately 58 per cent of the companies expect a rise in their exports while a sizeable 32 per cent hope to sustain their current level of exports.

Likewise, the investment index indicated a possible surge in investment activities in the ensuing quarters in the current fiscal.

The index for the last quarter stood at 42, a two point increase from the previous quarter. The survey also highlighted the fact that many companies are in the process of going in for capacity expansions and nearly 70 per cent of the firms are operating at above 75 per cent of their capacity.

"More and more companies are investing in greenfield projects and there is a commensurate increase in employment generation. 30 per cent of the companies surveyed expect a higher to much higher employment in the next quarter," added Mitra.

The respondents in the survey represented Heavy Industries (55 per cent), Light Industry (30 per cent) and Services (15 per cent) and included sectors like pharmaceuticals, textiles, telecom, food and beverages, heavy equipment, and machinery, financial services, FMCG, chemicals and fertilizers, IT, BPO, travel and tourism, auto and auto ancillary, construction and real estate, steel, cement and petrochemicals.

Optimistic vibes

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The index showed a decline from 73.4 in the third quarter to 67.5 in the fourth quarter

The survey which was conducted during the months of March-April 2005 pointed out that corporate India was optimistic about export, investment and employment generation

Removal of distinction between 'rural' and 'urban' in the Act