The Hindu Business Line : India Inc bullish on investments, worried about input costs: Survey

The high interest rate regime, appreciating rupee, and the rising cost of industrial inputs and raw materials have conspired to give corporate India’s confidence level a hard knock. Fifty per cent of the companies participating in FICCI’s latest Business Confidence Survey have reported that overall economic conditions have deteriorated over the last six months compared with 19 per cent in the last survey.

The expectations of the industry with regard to overall economic conditions in the coming six months are also not very optimistic. While 38 per cent believe that the current economic situation will be maintained over the next six months, close to a third feel that things would turn worse and the situation would further weaken.

Investments

The silver lining in the survey is the fact that nearly 54 per cent of the participating firms have reported that their investments are likely to increase in the coming six months. This figure is much higher when compared to the corresponding figure of 33 per cent obtained in the previous survey. Further, this improvement in the investments index is largely due to the higher reported investments by members from the heavy industry.

Assessment

The moderation in the assessment made by the participating companies about performance particularly at the economy and at the industry level is reflected in the movement of the confidence indices computed by FICCI. The values of the three indices computed by FICCI, which had declined to a five-year low in the last survey, have further moved down in the present survey.

The Current Conditions Index has dipped from 59.3 in the last survey to 54.5 in the current survey. The Expectations Index has moved down from 62.2 in the last round to 55.7 in the current round. The Overall Business Confidence Index has recorded a decline from 61.2 in the last survey to 55.3 in the present survey.

The present round of FICCI Business Confidence Survey for the third quarter of fiscal 2007-08 was conducted in March 2008.

The survey drew responses from 392 companies from a wide geographical and sectoral spread. Companies participating in this survey had turnover ranging from Rs 1 crore- 50,000 crore.

The respondents were largely from sectors such as cement, pharmaceuticals, textiles and apparel, leather, FMCG, heavy equipment and machinery, financial services, paper, metal and metal products, chemicals, IT, auto and auto ancillary and steel.

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