Economic scenario likely to improve: Survey

NEW DELHI: India's economic situation is expected to change for better in the coming months, although the fiscal deficit target set by the government seems to be unachievable in the current scenario, a survey has said.

The mood, as captured by the Assocham Business Confidence Survey for December 2012, seems to be improving at both the economic and industry levels, the chamber said.

"The latest round of the survey connotes that economic situation has somewhat turned better in the last six months. Further, there is an expectation of situation to be much better in the short to medium term horizon at both industry as well as firm level," it said.

Majority of respondents said they expect their sales volumes to be higher in the following quarter and investments are also expected to be somewhat constant in the coming six months, the survey said.

In reference to the recent approval given to multi-brand retail, it stated that the industry believes that while the measure would have a positive impact on farmers, consumers, rural youth, employment and in reducing inflation, it would negatively affect small retailers and SMEs.

Further, the survey said, factors affecting business were poor infrastructure, high cost of credit and increasing raw material prices.

It also noted the concerns of the respondents over the precarious fiscal deficit scenario of the government.

"Rising fiscal deficit has been a major cause of concern not only for the policy makers but also for the industry," Assocham Secretary General D S Rawat said.

The survey showed that majority of the respondents firmly believed that the fiscal deficit target set by the government is not achievable in the current scenario, he said.

The government hopes to restrict fiscal deficit at 5.3 per cent of the GDP in the current fiscal year in view of savings on certain expenditure and the likelihood of garnering budgeted proceeds from disinvestment and spectrum sale.

The government had earlier enhanced the fiscal deficit target from 5.1 per cent to 5.3 per cent.