The Hindu : Business : Business confidence index down

Online edition of India's National Newspaper
Tuesday, May 17, 2005

Business

Business

Business confidence index down

Special Correspondent

Outlook for the industry in the near future is positive

NEW DELHI: The coporates remain optimistic about prospects of export, investments and recruitment in the next six months even as India Inc's business confidence index fell in the fourth quarter of fiscal 2004-05 as compared to the previous period.

According to the FICCI Business Confidence Index, the sentiment of corporate India, however, is constrained by a confluence of factors, including VAT, continuation of central sales tax, fringe benefit tax and rising input costs, which are mainly oil-driven.

The survey report released on Monday says corporate India's confidence index fell to 71.6 in the fourth quarter from 75.6 in the third quarter. The current conditions index fell to 67.5 in the quarter under review from 73.4 in the third quarter. And the expectations index also registered a decline to 73.6 from 76.7.

Yet, the study said India Inc., however, exuded optimism on the export front with 58 per cent of companies surveyed expecting a rise in their exports and 32 per cent looking to sustain their current levels as the export index stood at 48 in the fourth quarter against 41 in the previous one.

So far as the investment front is concerned, 51 per cent of respondents sounded out new plans for investments. The investment index actually has shown a rise by two points at 42 from the previous quarter.

Similarly, the employment index in the fourth quarter moved up to 23 from 13. The study noted an increase in the proportion of firms intending to add to their present employee headcount from 25 per cent in the previous round to 30 per cent this time. Understandably, 69 per cent of respondents reported more than 75 per cent capacity utilisation in the fourth quarter as against 62 in the third one.

Availability of credit was not bothering India Inc with 91 per cent of respondents reporting no constraints and 81 per cent stating cost of credit was not high, said the survey based on responses of 428 companies with turnover ranging between Rs. 1 crore and Rs. 60,000 crores.

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