The Hindu : National : Industrial buoyancy expected to continue: CII survey

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Monday, Jun 20, 2005

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Industrial buoyancy expected to continue: CII survey

NEW DELHI: India Inc. expects the current buoyant conditions to continue in the coming six months largely due to higher orders, greater capital investment and improved capacity utilisation.

The Business Survey Outlook of the Confederation of Indian Industry for April-September 2005 revealed that the Business Confidence Index of Indian industry for April-September 2005 rose 0.9 points to 65.7 points over October 2004-March 2005.

The Current Situation Index, which compares the current business conditions with the previous six months, stands at 63.8, showing a gain of 0.7 points. The Expectation Index stood at 66.8 points, an increase of 1.1 points over the last survey.

Increase in overall confidence

There is also an increase in overall confidence index and it is in line with the responding firms' expectation of positive immediate prospects for their firms and industry, the survey said.

The CSI for Indian economy increased by 4.8 points and the index for the activity sector also rose by 0.5 points. It is indicative of the fact that the economy has picked up as per industry expectation during the previous six months, it said.

Since the Expectation Index (EI) for the economy increased by 4.5 points, there has been an increase in expectations on growth prospects of the activity sector by 1.5 points.

On the GDP front, 35 per cent of the respondents expect it to clock a growth of 6.5 to 7 per cent, while 34 per cent felt it would be between 6.0-6.5 per cent with 14 per cent saying the economy to grow at over 7 per cent, the survey said.

According to the survey, 83 per cent respondents are looking at fresh capital investments in the existing business unit. As many as 58 per cent of firms expect capacity utilisation ranging between 75-100 per cent, showing perhaps the emergence of some capacity constraints in coming months.

In terms of value of production, the survey said 83 per cent of respondents foresee an increase in the next six months, while 13 per cent are expecting no change.

On the employment front, over the next six months, 57 per cent of respondents said employment levels would remain constant, while 37 per cent said they would increase the level of employment in their companies. The survey says that growth in exports is expected to remain robust in the next six months with 73 per cent of respondents expecting export demand to increase in the next six months while 22 per cent expected no change.

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