India Inc. brimming with confidence: FICCI survey

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SME Times News Bureau | 01 Nov, 2010
India Inc. is brimming with confidence, a FICCI survey has revealed, with its three key indexes on current business confidence, expectations for the coming six months, and overall business confidence all showing increase in their values.

The FICCI Business Confidence Survey for the second quarter of the current fiscal shows that the confidence level of corporate India is on the upswing; the Current Conditions Index has seen an increase in its value to 75.2, the Expectations Index has moved up to 76.6, and the Overall Business Confidence Index has risen to 76.2 from their values 71.1, 72.2, and 71.9 respectively found in the last survey.

While an improvement in the performance level of corporate India over the last six months is noteworthy, what is more significant is their outlook for the coming six months. Companies are confident and are expecting to put up a good show in the next two quarters.

The survey has found that 76 percent of the firms do not intend to defer their investment plans even in the wake of rising lending rates by banks while nearly 50 percent of the surveyed firms have reported that they would scale up their investments in the coming six months.

On order book position, the survey shows, 62 percent of the surveyed companies have reported that their current order book position is better compared to the last six months while a whopping 84 percent of the firms said that they expect an improvement in their order book position in the next six months.

The FICCI Survey notes that the strength of their positive sentiment about domestic economy can be gauged by the fact that nearly 70 percent of the firms have brushed aside current uncertainty about the global economy as a factor having any bearing on the their outlook for the domestic economic situation.

The demand situation in the economy remains comfortable with every three out of four firms expecting sales volume to increase in the coming six months. However, 45 percent of the firms feel that consumption demand, particularly demand for consumer durables, will moderate in the months ahead following an unabated increase in interest rates.

The survey found two major concerns; the first relates to the rising cost of raw materials. In the present survey nearly 80 percent of the participating firms have said that rising cost of inputs is putting a lot of pressure on their business performance. Till about a year back this figure was about 50 percent.

The second issue, which firms have to contend with, relates to rise in manpower costs with 60 percent of the firms reporting rise in wage costs and salaries as a factor putting tremendous pressure on the operational costs.

The Business Confidence Survey conducted by FICCI drew responses from 359 companies with a wide geographical and sectoral spread. Companies participating in this survey had a turnover ranging from Rs. 1 crore to Rs. 2,00,000 crore.