FICCI survey shows a rise in business confidence despite the slump

Over a third of Indian corporates expect their industries to slump with the slowdown of the economy over the next six months, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI)

Results of the quarterly business survey released by FICCI on Monday, however, showed that the business confidence index rose 6.2 points to 44 for the March quarter, rebounding from a seven-year low in the previous quarter.

The survey, based on an analysis of the developments in 384 firms, showed that weak demand was the most frequently cited reason for faltering corporate performance.

About 40 per cent or more cited higher costs of raw materials as the main reason, staff and credit were also hurting several companies, the chamber's survey showed.

The survey showed 38 per cent of firms expected the economy and their industry's performance to "moderately or substantially" worsen over the next two quarters.

A quarter of the respondents saw better industry performance, compared with 23 per cent a quarter ago.

While 31 per cent also predicted a decline in sales, 40 per cent saw lower levels of investment over the next six months.

The Indian economy is expected to grow less than 7 per cent or less in the current financial year ending 31 March, against over 9 per cent in the preceding three years.

While the government has announced spending plans and tax concessions and reduction in lending rates, to bolster spending, FICCI said the proposals announced by the government needs to do more to stimulate the economy.

"This is all the more important as survey participants have pointed that it is the current situation that is somewhat better but they are not too confident about the future," FICCI said in a statement.