Slackening consumer demand and high interest rates have dampened the business confidence of Indian corporates, a survey by industry body CII said today.
According to CII’s quarterly Business Outlook Survey, the Business Confidence Index (BCI) during the second quarter of this fiscal (July-September) declined to 51.3 from 55 in April-June period.
It said stagnancy in reforms is the top concern for most firms, followed by slackening consumer demand and high interest rates. Rising input costs continues to be a major worry for firms.
Majority of the firms recorded an increase in raw material costs, electricity and fuel cost and cost of wages during April-June compared to the previous quarter.
“Expectations for the quarter ending September, 2012 show that a majority of firms still expect these costs to increase,” it added.
Credit availability
Out of 160 firms participated in the survey, an overwhelming 86 per cent reported a decline in availability of credit in April-June period mainly due to high interest rates.
Expectations for the second-quarter of this fiscal too reveal similar trend, with 84 per cent respondents expecting the availability of credit to remain stagnant or post a decline, it said.
“Reflecting the grim domestic policy scenario, investment sentiments have weakened considerably,” it added.
Foreign investments
About 43 per cent expect foreign investments to show a decline in July-September quarter, it said adding that about 89 per cent believed that infrastructural bottlenecks and lack of policy reforms were responsible for holding back domestic investments.
About 45 per cent participants expect the country’s GDP growth for 2012-13 in the range of 6.0-6.5 per cent.