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Showing signs of economic recovery and pushed by growth expectations, business confidence index in India saw rising trends during the fourth quarter of the financial year, a survey conducted by the Confederation of Indian Industry (CII) has revealed.
The CII Business Confidence Index, which had slipped below the psychological 50-level mark in the third-quarter of the current fiscal, rose to 51.3 in the final quarter. “Though the index has strengthened in the final quarter of the current fiscal, it is too early to assume that the slowdown has bottomed out and the green shoots of recovery have begun to emerge,” said Chandrajit Banerjee, Director General, CII.
The 82nd Business Outlook Survey is based on responses from 175 members. Majority of the respondents (53%) belonged to large-scale firms, while 14.8% were from medium-scale firms and 25.2% and 7% each were from small-scale and micro firms respectively. Further, 67.2% of the respondents were from manufacturing sector while 31% and 1.7% were from services and primary sectors, respectively.
However, about 62.2% said that their investments is either expected to decline or remain constant during the fourth quarter. Majority of the respondents rated high levels of corruption, persisting inflation, threat to continuation of reform process, escalated interest rates and political uncertainty as the major concerns. Encouragingly, respondents did not perceive global economic and political uncertainty as a major worry at this moment.
Survey indicates that most of the respondents (43.5%) expect GDP growth to come in a range of 5-5.5% for 2012-13 as compared to the advance estimates of 5% released by CSO recently. In an indication of improvement in economic growth in 2013-14, majority of the respondents expect GDP growth next year to conform to the official estimates of 6.1-6.7% as forecasted in the Economic Survey.
“For matching up to the government growth estimates for the next fiscal, it is critical that we remain focused on introducing the critical reform measures. The Union Budget 2013-14 has indeed covered some distance in this direction, but more measures are warranted” Banerjee said.
On inflation front, there are no major surprises. 42% of respondents expect average WPI inflation to lie in a range of 7.0-8.0% in the current fiscal. For 2013-14, however, most of the respondents (37.4%) expect inflation to moderate and come down in a range of 6.0-7.0%, which should help the Reserve Bank of India to focus more on growth revival next year.
Even as the government remains committed to adhering to target of fiscal consolidation, majority of the respondents (62.4%) expect the fiscal deficit to exceed the budgeted estimate of 4.8% next fiscal. On the current account deficit too, the survey does not paint a rosy picture, with most of the respondents expecting it to lie in a range of 4-5% of GDP in both current as well as next fiscal.
