Monday, December 31, 2007

India Inc''s Business Confidence Rises

India Inc''s business confidence has improved for October-March 2007-08 (H2) after a decline during April-September 2007, according to CII''s business outlook survey. Nevertheless, the business confidence still remains lower than the corresponding period last year.

CII''s business confidence index for October-March this fiscal, at 66.3, saw an increase of 2.4 points from April-September 2007. However, the index was down by 5.5 points when compared to the corresponding period last year. Business confidence, constructed as a weighted average of the Current Situation Index (CSI) and the Expectations Index (EI), was higher among services (68.3) compared with manufacturing firms (65.1), the CII survey noted. CSI, which indicates current business conditions, increased marginally by 0.2 points for October-March against the previous six months. However, when compared to the corresponding period last year, it was down by 6.3 points, reflecting a decrease in current business sentiments. EI, which reflects the perceptions of Indian industry with regards to performance of their company, sector and the Indian economy for the period October-March, gained 3.5 points over the first half of the current fiscal, reflecting higher expectations in terms of performance during the second half of 2007-08. However, the EI is down by 5 points when compared to the second half of the last fiscal, reflecting lower growth expectations of GDP and other aggregates during 2007-08, CII said.

About 59% of the respondents in the CII survey said they expected the GDP growth in 2007-08 to be approximately 9%, with around 22% of them expecting it to be in the range 9-9.5%. Also, 87% of the respondents said they planned to increase investments during the second half of the current fiscal. Around 59% of the respondents also said capacity utilisation for October-March this fiscal would be in the range 75-100%.

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