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While consumer sentiment is improving, business confidence seems to be losing steam, according to a Reserve Bank of India (RBI) survey.
RBI’s industrial outlook survey, after indicating improved confidence during the fourth quarter of 2013-14, signalled moderation during the first quarter of 2014-15.
Consumer confidence, however, showed signs of improvement, as indicated by the Current Situation Index and the Future Expectations Index.
The survey estimated Consumer Price Index-based inflation for 2014-15 at eight per cent, against 8.5 per cent estimated in the previous round of the survey.
The latest (January-March) inflation expectations survey of households showed three-month and one-year median inflation expectations of households had declined compared to the previous quarter. The survey showed the proportion of respondents who expected inflation to rise (both for the three-month and one-year forecasts) had decreased, compared to the previous quarter.
Modest recovery likely
Through the past two months, the outlook for the Indian economy has improved, with positive business sentiment, improved consumer confidence, expectations of a modest recovery in growth and decline in inflation. The survey showed a modest recovery was expected in 2014-15, with economic growth at 5.5 per cent, RBI said.
On the external front, which saw volatile times in the first half 2013-14, things could improve in 2014-15. The forecast for the country’s current account deficit for 2014-15 was 2.4 per cent of gross domestic product, significantly lower than the previous forecast.
