The Confederation of Indian Industry-Business Confidence Index (CII-BCI) reached a noteworthy high of 67.1 in the July-September 2023 quarter, surpassing the 66.1 reading from the previous quarter. This substantial increase, compared to the 62.2 recorded in the same period last year, reflects growing optimism within the Indian industry regarding business prospects and economic growth.

This surge in the index is attributed to robust domestic demand, ongoing government expenditure, and the improved financial health of corporations and banks. This positive trend persists despite a challenging global environment.

Notably, a significant portion of respondents consistently reported capacity utilisation ranging from 75-100 per cent for the third consecutive quarter.

Chandrajit Banerjee, Director General of CII, commented on the findings, emphasising the importance of this upswing and its alignment with industry experiences. 

He also highlighted the encouraging anticipation of increased rural demand, crucial for inclusive economic growth.

The latest CII-BCI reading reinforces the positive momentum observed in various high-frequency indicators, including GST collections, air and rail passenger traffic, and PMI data during the second quarter of the fiscal year.

The survey, conducted in September 2023, involved approximately 200 firms across diverse sectors and regions, with a majority from the manufacturing sector. A notable 54 per cent of the firms fell into the large and medium-size category. Most respondents expected improved profits driven by increased sales and new orders in July-September 2023.

The government’s heightened focus on capital spending, particularly in infrastructure, received praise as a significant driver of India’s short-term growth. Respondents generally anticipate GDP growth to fall between 6-7 per cent in FY24, in line with the forecasts of the RBI and other multilateral agencies.

Regarding interest rates, half of the respondents believed that the RBI would maintain a pause on the repo rate in the second half of 2023-24 to allow the impact of previous rate hikes to take effect.

The survey mirrored the buoyancy in rural demand, with 52 per cent of respondents expecting an improvement in rural demand in the first half of the current fiscal year.

To address inflation, a third of the survey participants viewed imposing export duties on commodities as the most effective measure, followed by open market operations, as noted by 26 per cent of respondents. About 29 per cent anticipated economic growth within the range of 6.5-7.0 per cent in the current fiscal, while approximately 16 per cent expected growth exceeding 7.0 per cent.

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