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NEW DELHI, Feb. 9

THE Business Confidence Survey (BCS) of FICCI for the third quarter of 2002-03, which elicited response from 521 companies, presents a mixed picture. While the companies surveyed were significantly optimistic about the current and anticipated performance of the overall economy and their own organisations, this perception got diluted with regard to their expectations about the performance of their specific industry.

The companies surveyed covered a wide spectrum of activities, with turnover ranging from Rs 1 crore to Rs 60,000 crore.

The sectors covered include pharmaceuticals, FMCG, heavy equipment and machinery, food & beverages, petrochemicals, construction and real estate, textiles, financial services, cement, automobiles and auto ancillaries, entertainment, chemicals and telecom among others. The BCS revealed that the impact of increasing globalisation was percolating down to the Indian industry. Further, there was a distinct note of export optimism amongst India Inc.

While almost 53 per cent of the respondents expect `higher to much higher' exports in the coming six months, another 33 per cent expect to maintain their exports at the existing level, the survey revealed.

At the same time, there has been an increase in the proportion of respondents who feel threatened by imports. While it was 14 per cent in the last survey of FICCI, the proportion has swelled to 23 per cent this time. Besides, the prospect of a further reduction in import duties on raw material and capital goods in the forthcoming Budget has elicited a welcome response from corporate sector as 45 per cent felt that the impact of such a reduction would be positive.

In the run-up to the Budget, Indian industry seems to be cautious about the implementation of the Kelkar committee recommendations. Almost 58 per cent of the companies surveyed were of the view that a phased reduction of exemptions and appropriate lowering of tax rates would be the most appropriate step.

However, 32 per cent of the respondents were prepared for a one-time lowering of tax rates and the immediate removal of all direct and indirect tax exemptions as suggested by the Kelkar committee. Only 10 per cent supported the continuance of the existing tax structure.

For the third consecutive quarter, weak demand has emerged as the most pressing problem faced by the industry.

About 61 per cent of the respondents have expressed concern regarding languishing market conditions, which is almost identical to the 62 per cent who responded similarly in the last business confidence survey.

Further, 34 per cent of the respondents complained about having excess capacity _ that again reflects the weak market conditions. It is this excess capacity which is holding back fresh investments.

The good performance of the economy has not gone unnoticed as 71 per cent of the respondents feel that the current overall economic conditions are `moderately to substantially better' as compared to the last six months.

The optimism regarding the economy is again reflected in Corporate India's expectations about overall economic conditions as 68 per cent expressed that the economy would perform `moderately to substantially better' in the next six months. Both these proportions are higher than the corresponding figures observed in the last survey.

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