New Delhi : India Inc’s business confidence for the first half of this fiscal has improved 2.4 points to 58.7, though global economic instability and slackening consumer demand remain major sources of concern, says a survey by the Confederation of India Industry (CII).
CII Business Confidence Index (CII-BCI) for April-September 2009-10 improved considerably compared to the business confidence in the past six months. The index at 58.7 for April-September 2009-10 reflects increasing confidence after two consecutive periods of decline.
“The rise in the index reflects better expectations for the coming six months and confirms our belief that the worst is likely to be over for the economy,” said CII director general Chandrajit Banerjee.
However, uncertain global economic outlook and slackening consumer demand still remained major concerns for the business community.
The Current Situation Index (CSI) that reflects current business conditions lost 2.5 points for the period under review from that recorded in the previous six months.
At the same time, the CII’s index of expectation of Indian industry with regards to performance of their company, sector and the economy for April-September 2009-10 gained 4.9 points from that registered in the second half of 2008-09.
In fact, this index for the first half of 2009-10 was the same as that of the corresponding period of the last fiscal, before the global slowdown hit India.
The survey of 374 companies revealed that 83 percent of respondents expect the economy to grow over 5 percent in 2009-10, with the majority expecting it to be around 5-6 percent.
Eight-six percent of the respondents expected it to be above 2 percent in 2009-10.
Given the ongoing global slowdown, 96 percent felt the economy would witness a turnaround and begin returning to normal growth only in the second half of 2009-10.
Regarding employment, 24 percent of the respondents expected it to increase during the next six months, 58 percent said it would be comparable with past levels while 18 percent said recruitment would likely decline.
About 90 percent of respondents felt availability of credit had not increased during October-March 2008-09, while 72 percent believed it would not increase in the first half of 2009-10.
On expectations regarding cost of credit, 62 percent of the respondents did not expect cost of credit to fall.