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Business confidence level up: survey

NEW DELHI: After months of slump, the performance of Indian industry is again showing signs of improvement and the business confidence level is on the rise. However, weak demand in the markets and high cost of credit continues to be a cause of concern.

The latest “Business Confidence Survey” of the Federation of Indian Chambers of Commerce and Industry (FICCI) shows that the economy has started recuperating and can move to a higher growth trajectory.

The survey respondents foresee an improvement over the next two quarters.

They have indicated an improvement in their current performance levels and are fairly optimistic about their performance in the near future as indicated by the indices.

FICCI surveyed around 300 companies with turnover ranging from Rs. 1 crore to Rs. 40,000 crore covering a wide range of sectors.

A majority of respondents said overall economic condition was “moderately to substantially” better vis-À-vis last six months, showing a major improvement compared to last survey.

“The current survey indicates a major jump in the overall business confidence index to 64.1 from 44 in the last survey. And this is clearly reminiscent of the high confidence level prevalent during the first half of 2007-08,” the survey said.

However, the participants also indicated that weak demand and high credit cost persist to be areas of concern as they are still paying on an average 12 per cent and would be comfortable if the rate is brought down by 3-4 per cent. In the current economic scenario, this expectation of a cut in the interest rate would be central to sustain the recovery process, it said.

However, weak demand continues to be a problem area. “Although the proportion of participating companies indicating weak demand as an area of concern has come down in the current survey, still this proportion is quite significant. Weak demand is still acting as a constraint for a majority of sectors. The steps taken by the Reserve Bank of India (RBI) and the government over the past two quarters have been instrumental in giving a boost to demand but there is still scope for further announcements to bring the economy back in full swing,” it added.

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