January 20, 2023
With the Business Confidence Index of the Confederation of Indian Industries reaching its highest level in two years for the quarter between October and December, India’s economy has shown resilient in the face of global headwinds and uncertainty.
The industry group said in a statement that the latest CII Business Confidence Index rebounded to its highest reading in almost two years of 67.6 in the October-December quarter from 62.2 in the previous quarter, “reflecting the optimism around India being in a’sweet spot’ despite the rising global uncertainties. The statement claimed that decreasing worries about the impending recession and its effects on the Indian economy helped to support the index’s rapid increase.
According to the CII, just a modest impact of the global recession was anticipated by 73% of survey respondents for the Indian economy, despite tightening financial conditions and rising geopolitical tensions worldwide.
According to 86% of respondents, the government’s emphasis on infrastructure is the biggest positive for the Indian economy, followed by an improvement in tax revenues and a strong recovery in consumption, the report added.
More than 120 businesses of various sizes from all industry sectors and geographical areas of the country participated in the study, which was performed in November–December 2022.
“Global challenges are anticipated to cause growth to decline even more over the ensuing year.
Therefore, it is crucial that the RBI refrain from hiking interest rates further in order to promote growth. Unsurprisingly, 47% of respondents claimed they had already begun to see how the RBI’s policy rate increases were affecting general economic activity, and the statement also said that high interest rates had an effect on private investment levels.
“In addition to having high borrowing prices, businesses have been unable to forward their investment plans due to the elevated uncertainty that is currently in place. However, the survey results show a positive outlook, with 90% of respondents believing that their company’s investment cycle will improve during the upcoming fiscal year, according to the statement.
The rural economy, which suffered greatly, particularly after the second wave of the Covid-19 outbreak and the more recent surge in inflation, was another area on which respondents believed politicians had focused. The fact that a recovery in rural demand is anxiously anticipated given its impact on the broader economy and that around 60% of respondents believe that a rise in rural consumption will occur in the upcoming fiscal year is promising.
Expectations for the October–December quarter improved with the return of commercial activity, with 60% of respondents anticipating an increase in sales and 55% anticipating an improvement in the number of new orders.
In spite of the majority of respondents reporting high input costs, 47 predicted an improvement in margins, which improved the profit picture for the quarter.
Source: Business Standard
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