Indian business optimism has surged to its highest since the end of 2010 on hopes of a more business-friendly administration after the elections, according to the Grant Thornton International Business Report.

The report noted that at 89 per cent, optimism amongst Indian business owners was ahead of the global average of 44 per cent. “This is up 20 per cent since the previous quarter. This optimism is driven by the fact that 92 per cent of Indian businesses expect their revenues to rise in the next 12 months, while 87 per cent believe their profitability will get a boost,” said the report. 

“The data provides hope that the recovery will move onto more sustainable footing and with economic uncertainty declining, the hope is that businesses will renew investment in the coming months to ensure long-term growth,” the report added.

However, it also cautioned of certain constraints facing businesses globally.

For India, the percentage of businesses citing economic uncertainty as a key constraint to growth has reduced to 60 per cent in this quarter from 78 per cent in the previous quarter, largely driven by the “hope of a stable government and significant reduction in the rupee volatility.”

Rising energy costs is another pressing constraint, besides factors such as shortage of finance, regulatory red tape and lack of skilled workers. 

Vishesh Chandiok, National Managing Partner at Grant Thornton India, said:  “Appreciation in the rupee, dramatic reduction in gold imports, stock markets near life-time highs, and improved forecasts for medium-term GDP growth has all helped boost business optimism.”

“However, the new regime will have its task cut out to demonstrate impact in the short-term for the above to sustain, or else sentiments will go down as quickly as they had improved,” he added.

Related Topics
comment COMMENT NOW