'India Inc suffers from low confidence'

NEW DELHI: The feel-good fabric worn by India Inc for the last two years appears to be fading, as rising credit costs begin to hit the overall business confidence of the industry, a Ficci survey revealed.
The chamber’s Business Confidence Survey (BCS), based on responses from 418 companies, showed that the assessment made by corporate India with regard to economic industry and firm level performance has moderated.“The overall Business Confidence Index has taken a beating compared with the index in the third quarter of 2006-07, down from 75 to 69. “However, at the enterprise level, a larger percentage of firms expect to export and invest more and generate additional employment in the next six months, while fewer firms anticipate higher profits and sales,” a Ficci statement said.
The three confidence indices — Current Conditions Index, Expectations Index and Overall Business Confidence Index — computed by the chamber have dipped, showing reduced confidence level among the Indian corporates. These indices have dropped from Optimistic zone in the last quarter to Moderately Optimistic zone in this quarter.
A high 42% of the firms surveyed complained of rising cost of credit as an impediment for their businesses. Of this, 80% of firms belong to SMEs. Of the respondents, 68% expect higher sales against 78% in last quarter, 30% foresee a rise in selling prices against 20% of the respondents last quarter and 50% expect the profits to go higher in the six months.
Expectations regarding industry performance in the near future have dampened with 61% of the respondents reporting ‘moderately to substantially better performance’ of their respective industry sectors over the next six months.
As for the anti-inflationary measures introduced by RBI, industries like food processing, textiles, construction and automobiles are apprehensive about a decline in demand and profits in the near term.