Indian companies look optimistic about the economy as the Confederation of Indian Industry (CII) Business Confidence Index (BCI) for the January-March quarter has surged to a record high of 64.1 as against 56.5 recorded in the previous quarter. There has been a sharp rise in the index after it remained subdued in the last few quarters.
The industry body has said that a sharp uptick in business outlook, at the onset of 2017, underpins the hope that the reform initiatives of the government would unravel a host of investment opportunities for firms, going forward. It further said that the significant rise in the index this quarter could be attributed to the distinct improvement in the ‘expectations index’ even as there is a marginal uptick in the ‘current situation index’, indicating that business sentiment is strong and firms are particularly upbeat about activity in their sectors in the future.
According to the survey report, business conditions are expected to improve as over 63 percent of the firms expect an increase in sales during January-March 2017, as compared to only 39 percent who experienced the same in October-December 2016. Moreover, 60 percent of the respondents expect an increase in new orders during January- March 2017, as compared to 41 percent who witnessed the same in the preceding quarter. Majority of the firms also expect no change in their domestic and international investment plans during the last quarter of the previous fiscal ended March 31.
More than half of the firms expect to maintain status quo on their plans about investing in the domestic economy during the quarter. Also, firms are keeping investment plans on hold despite the expectation of an improvement in sales and new orders in the January-March quarter owing to the existing excess capacity in the economy. However, on the question of their concerns in the coming six months, a majority of the companies listed low domestic demand followed by fragile global economic recovery and rise in commodity prices as the key issues. The findings are a part of CII’s 98th edition of quarterly Business Outlook Survey, which was based on around 200 responses from large, medium, small and micro firms, covering all regions of the country.
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