Apprehensions of stimulus withdrawal measures in the coming budget have dampened Business confidence, says the Federation of Indian Chambers of Commerce and Industry (Ficci).
A survey by it revealed that even as 63 per cent of the industry feels demand is strong, the majority also fears any change in overall policy parameters will hamper recovery.
Corporate India, says the survey, has said the government must wait for at least another six months before deciding to roll back the stimulus. Likewise, it has said the Reserve Bank of India (RBI) should restrict monetary policy action to the minimum, as the current bout of inflation was largely supply-driven. The survey, which had witnessed strong revival of business confidence in the first two quarters of the current financial year, saw the optimism subdue in the third quarter. The current conditions index was stationary at 71 in the third quarter, the same as that in the second quarter. However, the expectations index came down to 70 in the third quarter from 73.1 in the previous quarter.
The overall business confidence index, therefore, moderated at 70 in the current survey from 72.4 in the previous one. The overall index had rising since the financial year began.
On the back of robust growth, 77 per cent of the companies felt economic conditions would improve in the coming six months. However, the previous quarter ended September had seen 82 per cent of the respondents optimistic about business prospects over the next six months.
Similarly, the percentage of respondents who expected improvement in industrial performance in the next six months fell in the third quarter to 67 per cent from 77 per cent in the previous quarter’s survey.
The Ficci report stated that government stimulus had a definitive impact on industrial and economic performance. The report said there was concern amongst industry players that if RBI raised policy rates, that would lead to an increase in bank interest rates, which would hit growth.
