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Our Bureau

New Delhi , May 16

EVEN as India Inc exuded optimism about export prospects, investments and recruitment in the next six months, its business confidence index fell in the fourth quarter of 2004-05 compared to the previous period, a FICCI survey has said.

According to the FICCI Business Confidence Index, the sentiment of corporate India is psychologically 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 confidence index fell to 71.6 in the fourth quarter against 75.6 in the third quarter, it said.

According to the survey, the current conditions index fell to 67.5 from 73.4. The expectations index also registered a decline to 73.6 from 76.7.

The study, however, said that India Inc exuded optimism on the export front, with 58 per cent of the companies surveyed expecting an increase in exports and 32 per cent looking to sustain current levels.

The export index stood at 48 in the fourth quarter against 41 in the preceding one, it added.

On the investment front, 51 per cent of respondents sounded out new plans for investments. The investment index rose by two points to 42.

The survey also recorded an increase in employment index at 23 (13).

"There has been an increase in the proportion of firms intending to add to their current employee headcount from 25 per cent in the previous round to 30 per cent this time," the survey said.

On capacity utilisation, it said that 69 per cent of the respondents reported more than 75 per cent utilisation, against 62 earlier.

The survey, which took into account the responses of 428 companies with turnover ranging between Rs 1 crore and Rs 60,000 crore, said that India Inc's outlook for industry performance in the near future is positive, with 70 per cent looking forward to much better performance.

Some 71 per cent of the respondents expected higher sales in the next six months.

While 30 per cent foresaw an increase in prices, 55 per cent said that they would maintain the current prices.

The survey also said that 49 nine per cent of the respondents expected higher profits in the next six months.

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