After getting the recession jitters, India Inc finally seems to be finding its lost-to-the-recession business confidence. With the UPA government starting its second term and economic reforms and policy decisions already showing some positive results, sunny days may well lie ahead on the horizon.
At least that’s what corporate India feels. Companies are predicting a positive economic outlook in the coming six months. And if numbers are something to go by, more than 300 companies, according to a survey conducted by Federation of Indian Chamber of Commerce and Industries (FICCI) have echoed similar reactions.
If one leaves aside the quarterly figures and take into account the growth of a full year and compare it with previous years, according to a recent finding, one finds that in 2008-09, the economy grew 6.7 per cent which, though it is in contrast with the growth percentage of 9.0 per cent during the previous three years, was better than expected.
The survey finds that as many as 57 per cent of the companies measured on the quarterly Business Confidence Index (BCI) of FICCI, indicating that they expect the overall economic condition to be 'moderately to substantially' better in the next six months.
A look at a similar survey conducted by FICCI last year reveals a rather poor figure as most of the industries were not so hopeful of such a change. The fourth quarter of fiscal 2008-09 is in sharp contrast with findings of the BCI of the previous quarter when only nine per cent firms had agreed on seeing a brighter future.
The new-found confidence in the industry corridors stems from the Manmohan Singh-led UPA government retaining its hold on power for the second term with a thumping majority. Also, it is looking to embark on a 100 day programme to bring the economy back on track.
The BCI for the fourth quarter of fiscal 2008-09 was up to 64.1 from 44 in the last quarter. However, the government also wants banks to pare lending rates to enable industries to source funds for their expansion and day-to-day needs. Finance Minister Pranab Mukherjee, who is likely to meet chiefs of state-run banks in the second week of June, has emphasized on the necessity of cutting rates, in line with the falling cost of funds, and stepping up loans to industry.
Concerns however, continue to remain high over weak demand reported by a third of the respondents. Other grievances include the rising cost of raw materials and manpower.
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