New Delhi December 30, 2013: Signalling early signs of revival in business sentiments, the CII Business Confidence Index (CII-BCI) rose to 54.9 in the third quarter (October-December) from 45.7 for the July-September 2013 quarter.
However, the survey strikes a note of caution as the downside risks to growth have still not abated and supply side bottlenecks continue to pose a problem.
“With some positive signals emanating from the global economy, which find a resonance in our improved export performance and is causing our current account deficit to decline, we believe that the slowdown in the domestic economy may have bottomed out in the second quarter and the trend could reverse henceforth,” said Chandrajit Banerjee, Director-General of the Confederation of Indian Industry (CII).
The 85th Business Outlook Survey is based on responses from over 174 industry members.
Majority of the respondents (63 per cent) belong to large firms, 12 per cent from medium-scale and 25 per cent from small-scale. Further, 65 per cent of respondents were from the manufacturing sector, while 35 per cent were from services.
According to the survey, 58 per cent of the respondents expect an increase in sales in the third quarter, higher than 45 per cent in the previous quarter. Majority of the respondents expected input costs to increase. But, the silver lining is that the percentage of respondents who expect expenses on raw materials, electricity, and wages & salaries to increase had declined significantly from the last quarter, a CII release said.
Against the backdrop of an expected improvement in sales growth and moderation in input costs, 43 per cent of the respondents expect an increase in their pre-tax profit margin in the third quarter, higher than 31 per cent in the last quarter.
Export boost
Export prospects also look positive in the current quarter, according to the survey, as 53 per cent firms expected their exports to rise in the current quarter, up from 49 per cent in the last quarter. Similarly, 56 per cent respondents didn’t expect their imports to increase during the current quarter.
Among the areas of concern was GDP growth in the current fiscal, which is expected to settle in the range of 4.5-5 per cent and high inflation, according to the survey.
“Given that inflation is primarily being led by food products, the solution needs to be sought in the supply side in agriculture sector rather than tightening monetary policy,” Banerjee said. Business Line
