India’s business confidence has seen a sharp erosion in June compared to six months before, according to an Assocham Business Confidence Survey.

It would take at least two quarters before the mood turns for “somewhat better’’, it added.

According to the survey, there is however, a silver-lining as majority of the respondents felt that the situation would show some recovery in the next months.

Macro-economic situation

As many as 51.6 per cent respondents in the survey said the macro-economic situation is worse than what was prevailing six months ago, though 40.3 per cent stated they are optimistic.

At the industry level, 38.7 per cent believe that the situation has deteriorated further in the last six months, just like the macroeconomic conditions.

There were a less number of respondents who are positive about the present economic situation than it was in six months before. But as many as 59.7 per cent respondents feel that firms will do better in future.

Sales volume

Majority of the respondents (52 per cent) felt that their sales volume would increase. However, this ratio has declined between the latest June survey and the one undertaken by Assocham in March last.

Mr Rajkumar N. Dhoot, President, Assocham, said: “We have to ensure that the business environment improves and the domestic demand picks up, especially at a time when hopes of global economic recovery are bleak.  Both the Government and the Reserve Bank should work together to provide a congenial atmosphere so that the industry can respond with better investment and consumers can get a boost.”

Majority of those covered in the survey felt that the prices will remain more or less same. There has been a fall in respondents who believe that the prices would be higher.

“Manufacturers would find it extremely difficult to pass on the increasing cost to the consumer in the given scenario. This is why we must ensure lowering of costs both raw material and interest,” Mr Dhoot said.

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