'Indian business optimism at its highest since 2010'

Last Updated 26 April 2014, 19:12 IST

There has been a surge in business optimism, with all global regions marching in step despite a slowing of growth in some emerging economies, according to new research from the Grant Thornton International Business Report (IBR), a survey of more than 3,300 businesses in 45 economies.

Grant Thornton said in a statement on Friday quoting the IBR that Indian business optimism climbed to its highest since the end of 2010 as the country gears up for an election which is expected to return a more business-friendly administration.

“At 89 per cent, optimism among Indian business owners remains well 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,” the report said.

While optimism has risen on several fronts, the report noted certain constraints being felt by businesses globally.

“Economic uncertainty remains a key constraint; however, the proportion of businesses globally citing this as a constraint to growth is down from 42 per cent to 38 per cent over the past three months.”

For India, this percentage has subsided (from 78 per cent in the previous quarter to 60 per cent in this quarter), largely driven by the hope of a stable government and significant reduction in the rupee volatility.

“Rising energy costs is another pressing constraint (61 per cent) besides other factors such as shortage of finance (57 per cent), regulations/red tape (60 per cent), and lack of skillked workers (40 per cent), the report said.

“Appreciation in the rupee, dramatic reduction in gold imports, stock markets near lifetime highs and improved forecasts for medium-term GDP growth have 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 it has improved,” said Vishesh Chandiok, National Managing Partner, Grant Thornton India.

(Published 26 April 2014, 19:12 IST)

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