This story is from December 6, 2007

Business confidence touches 5-yr low

PTI / Dec 6, 2007, 14:22 IST

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While export-oriented units bore the brunt of currency appreciation in the earlier period of rising rupee, companies connected peripherally with exports are also getting hit.

NEW DELHI: India Inc's business confidence index has touched a five-year low with a dip in export growth due to rising rupee and high interest rates beginning to hit a few sectors, a survey by industry body FICCI pointed out.
FICCI Business Confidence Survey of 321 companies from over 17 sectors declined to 61.2 in November this year from 68.4 computed six months ago.It said all the three indices - Current Conditions Index, Expectations Index and Overall Business Confidence Index touched a five-year low.
The Current Conditions Index dipped to 59.3 from 65 in the last survey. The Expectations Index also slipped from 70.1 in the last round to 62.2 in the new survey.
India's GDP growth rate dipped to 8.9 per cent during the second quarter of current financial year from 10.2 per cent in the comparable period last year, according to official data.

While export-oriented units bore the brunt of currency appreciation in the earlier period of rising rupee, companies connected peripherally with exports are also getting hit. High interest rates have also started affecting the intermediate and capital goods sectors besides the consumer goods industry.
The industry perceives the growth in India to slow down not only due to the slowdown in exports but also because of moderation in other sectors of the economy, the survey said.
The rupee has gained almost 12 per cent against the US dollar in 2007, while the Reserve Bank has raised interest rates and banks' mandatory cash deposits to check credit growth to certain sectors and moderate inflation.

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