India Inc buoyant, says CII survey

Industry expects higher orders, investments

The CII Business Survey Outlook for April-September 2005 shows buoyant sentiments prevailing in corporate India.

Based on actual performance during October 2004 to March 2005, the survey reveals that industry expects higher orders, higher capital investments, improved capacity utilisation and robust exports in the coming period.

The GDP growth rate in 2005-06 is expected to be between 6 and 7 per cent.

The CII-Business Confidence Index (BCI) for April-September 2005 stood at 65.7 points, which reflects a "moderate positive confidence" on the CII scale and marks an increase of 0.9 points over the previous period.

The index is constructed as a weighted average of the current situation index (CSI) and the expectation index (EI), which gained by 0.7 points and 1.1 points, respectively.

The survey states that an increase in the overall confidence index is in line with the responding firms' expectations of positive prospects for themselves and for industry.

The CSI, which compares the current business conditions with those of the previous six months, stands at 63.8, compared with the previous period.

The EI, which reflects the perceptions of industry with regard to the performance of companies, their sectors and the economy in the next six months, stands at 66.8.

However, the survey finds that the expectation index for own-company activity remained 70.0, which is the same as seen in the last survey.

On the GDP front, the survey finds that 35 per cent of the respondents expect the GDP growth to clock 6.5 to 7 per cent while as many as 83 per cent are looking at fresh capital investments in existing business units.

A capacity constraint can possibly emerge as 58 per cent of the firms expect capacity-utilisation to be between 75-100 per cent.

This corroborates the survey's findings of 83 per cent firms expecting to be on a capacity-expansion spree with fresh capital investments on the anvil in the coming period.

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Upbeat mood

• Business Confidence Index gains by 0.9 points
• GDP growth in 2005-06 expected between 6-7%
• 63% respondents expect Capital investment above 100 lakhs
• 58% expect capacity utilisation between 75-100%
• 83% expect increase in new orders from domestic market
• 57% expect employment to remain constant
• 73% exporters expect exports to remain robust in the current fiscal year
• 69% foresee increase in imported raw materials prices