NEW DELHI, April 11, 2013 /PRNewswire/ --
* Ninth round of survey shows optimism for the third consecutive quarter running
* 74 per cent of the 500 Indian CEOs/CFOs surveyed report that overall economic conditions have improved or remained same in the Jan-March quarter over the previous quarter
* Two in five respondents expect economic situation to improve in the April-June quarter
A strong commitment by the government to improve economic conditions and a change in monetary policy seem to have had a positive effect in the Indian business community. Some 71 per cent in the latest Business Today-C fore Business Confidence Survey say the economy will be in a better shape or remain unchanged in the April-June quarter.
Forty-five per cent of the respondents are hopeful that the recent budget will have positive impact on their company's performance. In the Union Budget, Finance Minister P. Chidambaram not only took steps to meet the fiscal deficit target of 5.3 per cent of GDP for the financial year 2012/13 but also to set a lower target for the current financial year. The FM's path of fiscal consolidation will not have an immediate effect on the performance of companies but it will help country move towards a stable economic environment that could spur investments and demand in the long run.
Earlier, the government has announced a series of economic reforms such as partial deregulation of diesel prices, allowing foreign investment into organised retail, setting up of the Cabinet Committee on Investments, amendments to the land acquisition bill, and clearing the Banking Laws (Amendment) Bill, 2011, among others.
The confidence level among Indian businessmen has risen for the third quarter in a row after reaching an all-time low in mid-2012. On a scale of 100, confidence levels rose to 54.5 for January-March quarter, up from 53.8 in the previous quarter. The survey reveals that 75 per cent of the respondents - a total of 500 CEOs and CFOs are quizzed by market research agency C fore - reported that the demand conditions in the January-March quarter have improved or stayed same.
Jan-Mar Oct-Dec Jul-Sept Apr-Jun Jan-Mar Oct-Dec Jul-Sep Apr-Jun Jan-Mar 2013 2012 2012 2012 2012 2011 2011 2011 2011 Overall Business confidence index 54.5 53.8 52.4 49.3 55.4 52.3 56.8 64.4 74.8 Business confidence index for Heavy Engineering 50.6 50.2 49.5 48.3 52.7 50.4 55.1 62.3 73.4 Business confidence index for Light industry 54.2 52.3 51.9 48.7 53.2 51.8 56.3 64.1 74.5 Business confidence index for Services 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 has captured the mood of corporate India for nine quarters now, 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.
In the latest round of the survey, 35 per cent respondents said they believed their profits will pick up in the April-June quarter, and 32 per cent expect investments in business operations to get better. Only one-third felt the recent monetary policy stance by the Reserve Bank of India will have a positive impact on their companies' performance. "On large borrowings, the interest rate is too high at 10-11 per cent. Interest rates should be brought down further in order to encourage companies to invest," said Ravi Jaipuria, chairman of RJ Corp.
Still, some felt the mood was upbeat. "The India flavour is coming back. Thanks to the finance minister's recent visits to Asia and Europe to revive the confidence of global investors," said Venugopal Dhoot, chairman and managing director of Videocon Industries.
Aroon Purie, Editor-in-Chief, India Today Group, of which Business Today is a part of, said the survey results signal the performance of the economy was bottoming out. "The survey results reflect the policy changes made by the government in the last two quarters culminating in pronouncements in the Budget. More needs to be done to move the needle on business confidence decisively."
K. Sai Srinivas
Deputy Editor, Business Today
Brand Manager, Business Today
SOURCE India Today Group