NEW DELHI, October 9, 2013 /PRNewswire/ --
* Latest survey shows lowest ever confidence level in corporate India since the survey began in March 2011
* More than a quarter of the 500 Indian CEOs/CFOs surveyed report that overall economic conditions have worsened in the July-to-September quarter from the previous quarter
* 86 per cent of the respondents expect the economic situation to remain same or worsen in the October-to-December quarter
The weakness in the Indian rupee, global market sentiments, slowdown in economic growth, and the hawkish stance by the Reserve Bank of India severely impacted confidence among Indian businesses in the second quarter of the current financial year.
Business confidence slipped for the second consecutive quarter creating a new low. On a scale of 100, the index fell to 48.2 for July-September quarter, the lowest ever score recorded in 11 consecutive quarters that the Business Today-C fore Business Confidence Survey has been conducted.
Some 86 per cent of the respondents in the latest Business Confidence Survey expect the economic situation to remain unchanged or worsen in the October-December quarter, an increase of three percentage points from expectations of the July-September period. Nearly two-thirds of the respondents said that the latest economic indicators and RBI's hawkish policy stance will affect their investment plans for the second half of 2013/14.
After a steady rise throughout 2012/13, the business sentiment changed dramatically in the first quarter of 2013/14 as concerns grew over the country's economic health. While the government announced some measures to contain the widening current account deficit and rupee slide, the steps failed to improve the sentiments.
According to the survey, the expected slowdown in investment plans is accompanied by a fear of rise in costs of external finance and raw material - 50 per cent the respondents expect the cost of external finance to worsen and 69 per cent expect raw material costs to rise.
Jul-Sept Oct-Dec Oct-Dec 2013 Apr-June Jan-Mar Jul-Sept Apr-Jun Jan-Mar Jul-Sep Apr-Jun Jan-Mar 2013 2013 2012 2012 2012 2012 2011 2011 2011 2011 Overall Business confidence index 48.2 48.7 54.5 53.8 52.4 49.3 55.4 52.3 56.8 64.4 74.8 Business confidence index for Heavy Engineering 47.4 46.6 50.6 50.2 49.5 48.3 52.7 50.4 55.1 62.3 73.4 Business confidence index for Light industry 46.8 48.2 54.2 52.3 51.9 48.7 53.2 51.8 56.3 64.1 74.5 Business confidence index for Services 50.1 50.8 57.7 56.8 55.5 52.4 59.5 55.2 58.6 65.7 75.7
Business Today-C fore Business Confidence Survey, which captures the mood of corporate India every quarter, has become a bellwether of business and economic sentiment since its inception in January-March 2011. The first survey recorded the highest-ever confidence level at 74.8.
Aroon Purie, Editor-in-Chief, India Today Group, of which Business Today is a part of, said the survey results show India Inc is not sure which way the wind is blowing this election season. "It is a worrying trend that business confidence is hitting new lows for the past two quarters. The entire political class should be held accountable for this state of affairs."
Analysts said the survey results showed that there was no hand at the wheel in the country. "The rupee's relentless fall coupled with the government's inability to curb its slide led to a perception amongst businesses that the government does not have a command over the economy," said Abheek Barua, Chief Economist at HDFC Bank.
Head - Marketing & Syndications,
India Today Group Digital
SOURCE India Today Group