India's business confidence improves but costs still weigh: CII Survey

NEW DELHI: India's business confidence has improved from the previous quarter but concerns over stagnancy in reforms and rising cost of finance and raw materials remain, a survey conducted by the Confederation of Indian Industry shows.

The survey pegs the CII Business Confidence Index for the first quarter of the current fiscal (April-June) at 55, as against 52.9 in the last quarter of 2011-12. The reading, however, is lower than the 62.5 for the first quarter of the previous fiscal. The 79th Business Outlook Survey, based on a sample size of 200 companies, was released by CII on Saturday.

"Although the index value is showing a moderate recovery for the past two quarters, it remains at a depressed level and far below the levels achieved in the previous year", said CII Director-General Chandrajit Banerjee.

The survey shows that over 40 % of the respondents expect the GDP growth rate in the current fiscal to be between 7% and 7.5%, while over 30% expect it to be higher. More than a quarter of the respondents were optimistic that the inflation rate for the current fiscal would be below 7 %, after coming in at 8.8% for 2011-12.

Almost 50 % of the respondents are looking at an increase in domestic investments in the current quarter. Of these, 23.6% expect to increase investments by up to 10%, 16.1% by 10%-20%, and 7.5% by more than 20%. Majority of the respondents also expect a rise in international investments in the current quarter.

Capacity utilisation is likely to see an improvement as well. Over 58% of the companies surveyed expect it to be above 75% in the current quarter, as against about 50% respondents whose actual capacity utilisation was above 75% in the fourth quarter of 2011-12.