Corporate India upbeat despite inflation concerns: survey

Corporate India is confident of better business prospects in the first half of the current financial year (April-September) despite concerns over inflationary pressures and global economic instability, says a survey by industry body CII.

The 73rd Business Outlook Survey of the Confederation of Indian Industry reflects a slowing boost in confidence for the April-September 2010 period compared to the past six months. The business confidence index (BCI) rose by 1.5 points for the period, compared with a 7.4 points increase during the second half of 2009-10.

The bi-annual survey, which is considered to capture the confidence level of industry, showed a BCI of 67.6 level over the previous survey that gauged business mood for the six months ended March 2010.

''Although the increase is moderate, it is important to note that it is on a high base of the previous survey,'' said CII director general Chandrajit Banerjee. When compared with the same period last year (April-September 2009), the BCI has gained about 9 points. The overall index captures the expectations from the economy in the coming six months as also the current conditions.

The survey covered more than 450 companies across India. It revealed that business outlook for the services sector, including the outsourcing segment, is relatively higher than the overall business sentiment. It also pointed out that three in every four companies plan to increase investments in the coming six months, while two thirds of the respondents were confident that exports will grow further in the next six months.

The positive sentiment was also reflected in expectations of capacity utilisation, with 59 per cent of the respondents hoping to see 75-100 per cent utilisation for April-September 2010, compared to 44 per cent who said they will see such high capacity utilisation in the previous survey.
Interestingly, the survey revealed that capacity utilisation is higher for large size firms.