India Inc’s confidence index tanks in Q4, says FICCI survey

The overall Business Confidence Index has taken a beating in the fourth quarter of last fiscal, indicates a FICCI survey.

The overall Business Confidence Index has taken a beating in the fourth quarter of last fiscal, indicates a FICCI survey. However, in the last quarter of 2006-07, a larger percentage of firms said that they expect to export more, invest more and generate more employment in the next six months while fewer firms anticipate higher profits and sales.

According to the study, all the three confidence indices — the current conditions index (CCI), the expectations index (EI) and the overall business confidence index (OBCI) dipped in the quarter ended March 31, 2007. The CCI is recorded at 70.4 in the quarter, which is lower than the 73.7 mark in the third quarter of last fiscal. The EI is down from 75.7 to 68.2, while OBCI has fallen from 75 to 69. All the three confidence indices have descended from their position in the ‘significantly optimistic’ zone in the third quarter to the ‘moderately optimistic’ zone in last quarter of 2006-07.

The study says that the industries including food processing, textiles, housing, construction and automobiles are apprehensive about a fall in demand and profits in the near term due to RBI’s monetary interventions. However, basic and intermediate goods industries including basic metals and alloys, cement, chemicals, machinery and equipment and non-metallic mineral products are looking forward to more buoyant conditions.

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The survey reveals that during the fourth quarter about 64 per cent of the respondents found the current overall economic conditions to be ‘moderately to substantially better’ than in the last six months, as compared to 78 per cent in the third quarter last fiscal. Expectations regarding overall economic conditions for the next six months have taken a hit as about 59 per cent of the participants expect that to be ‘moderately to substantially better’ as against 72 per cent in third quarter.

The proportion of respondents expecting the economic conditions to remain the same over the next six months has dropped from 25 per cent in third quarter to 18 per cent in last quarter. Moreover, where just 3 per cent of the participants expected the overall economic conditions to become ‘moderately to substantially worse’ in third quarter, almost 24 per cent think alike in last quarter. About 61 per cent of respondents expect better industry performance over the next six months against 71 per cent in the third quarter.