Over half of the small and medium enterprises that took part in a poll expect higher growth and improved business environment in the coming months on account of policy reforms undertaken by the new government.
Around 54 per cent of the over 500 small and medium enterprises (SMEs) surveyed felt the new government is likely to create an environment to boost growth in the country, the study by IndiaMART said.
The survey saw the SMEs confidence in the economy rising from 5.8 in May 2014 to 6.6 in October, on a 10-point scale.
Significantly, 70 per cent of the SMEs foresee improved business conditions over the next six months. Over 45 per cent expect growth of more than 20 per cent in business during the same period, despite the fact that 41 per cent of these businesses experienced less than 5 per cent growth in the previous six months, the survey said.
In May 2014, when the last SME Sentiment Survey was conducted, around 66 per cent of the respondents had predicted an improvement in business conditions. The current results clearly indicate optimism among SMEs, who are hoping for some significant reforms in the next few quarters, the study added.
"SMEs have been highly positive on the future prospects of growth, largely owing to the recent change in the government and are quite hopeful of a positive transformation. The survey is an extension of their expectations and the change that they seek for their progress," IndiaMART Founder & CEO Dinesh Agarwal said in the report.
Financing has been a major constraint to the growth of the SMEs, the survey said.
Other critical challenges posing a hindrance to SMEs growth were increasing competition from large businesses, declining sales, rising production cost, among others.
The survey also reflects a sharp decline in the input cost for small and medium businesses, which has reduced from 82 per cent in May 2014 to 57 per cent in October 2014.
The SME Sentiment survey aims to analyse the performance of Indian SMEs and identify their growth expectations over the next six months, besides recognizing the challenges they face to scale up their businesses.
