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Industry upbeat about recovery: Ficci

BS Corporate Bureau

Gujarat notwithstanding, Indian industry is quite optimistic about the prospects of an economic recovery over the next six months.

The Business Confidence Survey, conducted by the Federation of Indian Chambers of Commerce and Industry in April, reveals that 86 per cent of the respondents feel the possibilities of a recovery over the next six months are between good and average.

The survey covered 332 respondents across a wide range of sectors including engineering, electronics, chemicals, automobiles, pharmaceuticals, textiles, information technology, retail, finance, steel and food processing.

The services sector, in particular, was upbeat about a recovery, with all the respondents rating the prospects between good and average.

The heavy industries sector was not so hopeful, with only 10 per cent rating the prospects good. While 63 per cent rated the prospects average, 27 per cent rated them bad.

The initial disappointment with the budget seems to have worn off. While 26 per cent of the respondents said the impact of the budget on their business was negative, 74 per cent ranked the impact somewhere between neutral and positive.

Nearly 38 per cent of the respondents reported strong business confidence, while 44 per cent reflected an average level.

"The positive business sentiment revealed by the survey matches the projections of higher growth for India made by the International Monetary Fund and the Asian Development Bank," Amit Mitra, secretary-general of Ficci, said.

Almost 40 per cent of the respondents reported an improved business performance compared to the last six months, while 33 per cent predicted higher to much-higher profits over the next six months.

About 43 per cent expected to retain their present margins. As far as sales were concerned, nearly 47 per cent predicted higher to much-higher sales over the next six months.

Inventories are likely to be lower for 19 per cent of the respondents, even as 52 per cent expect inventories to remain at the same level.

Unfortunately, job prospects do not look too bright, despite the positive sentiment of the industry. Only 15 per cent of the respondents expect a rise in employment. A significant 36 per cent reported plans for fresh investments over the next six months.

Companies are also quite buoyant about future exports, with 42 per cent expecting a much-higher to higher level over the next six months.

As far as the threat from imports was concerned, 53 per cent of the respondents did not think of the problem as serious, though 41 per cent ranked it as moderately so.

As many as 88 per cent of the respondents expected interest rates to fall in the medium term, while 12 per cent felt they would rise.

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