India Inc business confidence drops further: FICCI survey

India Inc business confidence drops further: FICCI survey

India Inc’s business confidence index dropped to 57.4 in the January-March quarter of 2013, as against 61.2 in the previous quarter, a survey by Industry Chamber FICCI has showed; it also called for lower lending rates by banks to support investments and overall growth in the economy. 

 According to the survey, 74 per cent of the respondents said banks' failure to cut lending rates immediately would have a serious to moderate impact on their future investment plans.

"The recent easing of Wholesale Price Index (WPI) numbers will give some more space to the central bank to consider further rate cut in the policy rates," FICCI said in a statement here.

 Between last April and now, the Reserve Bank of India has cut the benchmark repo rate (rate at which it lends to banks) by 125 basis points (bps), but banks have cut their base rates by less than 50 bps, citing tight liquidity in the system. RBI is scheduled to announce its first mid-quarter monetary policy review on June 17.

 The survey also said that Indian business felt the worst is not yet over due to the high current account deficit (CAD) coupled with weak market demand, as well as inadequate infrastructure investments.

Sample size

The survey drew responses from about 200 companies with a turnover ranging from Rs 10 lakh to Rs 1 lakh crore. The participating companies belonged to a varied array of sectors such as textiles, cement, financial services, chemicals, metal and metal products, automobiles, FMCG, electrical equipment and machinery, paper and paper products.

 About 49 per cent of participants indicated that they anticipate an improvement in the overall economic situation over the first two quarters of FY ’14, as compared to 52 per cent in the last survey round.

The respondents also indicated weak demand to be a worrying factor hampering the overall business performance.

The companies surveyed were not upbeat about the sales prospects and profit margin performance over the next six months.

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