India Inc expects biz sentiment to improve in coming months

Feb 17 2013, 15:40 IST
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SummaryThe mood among corporates is optimistic and they expect better business conditions: survey

Expecting pro-growth announcements in the upcoming Union Budget, Indian corporates are optimistic on improvement in business conditions in the coming months, two independent surveys have said.

Majority of Indian corporates, surveyed by Ficci and PHD Chamber of Commerce and Industry, separately, said the mood among corporates is optimistic and they expect better business conditions, which would lead to more sales and higher profit margins in the next six months to three years.

Ficci, in its Business Confidence Survey, said majority of respondents are positive about the next two quarters (January-June 2013) as they expect pro-growth announcements in the upcoming Union Budget.

The respondents also said they are hopeful that green shoots would soon appear as the government continues to move ahead on the reform agenda, it said.

Though the economic situation continues to be difficult and business sentiment remains weak, we will be pro-growth and give a renewed thrust to capital formation, Ficci President Naina Lal Kidwai said.

Sharing similar views, PHD Chamber said in its study that the long-run prospects of business in the country seem bright as majority of corporates have plans to expand their businesses in next three years.

It said effective policy interventions and reform initiatives would pave the way for greater investment intentions by corporates.

The time is most opportune to provide greater policy environment that will reassure investors' confidence with promises to open more avenues for projects, policies, products and partnerships, PHD Chamber of Commerce and Industry President Suman Jyoti Khaitan said.

Besides, both the surveys stated that corporates feel that recent steps by the RBI to reduce the repo rate and Cash Reserve Ratio (CRR) would help revive investors' sentiment and accelerate investment in the near future.

Shedding its nine-month long hawkish monetary policy stance, the RBI has cut short-term lending rate called repo by 0.25 per cent to 7.75 per cent and CRR by similar margin to 4 per cent.

Further, Ficci in its study said factors like weak external demand, rising cost of raw-material, high interest rates and lower investments continue to nag corporates.

The survey stated that business confidence of Indian companies declined slightly to 61.2 during October-December 2012-13, from 62.4 in the previous quarter (July-September).

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