Business confidence inched up in September quarter: industry survey | Mint

New Delhi: Business confidence inched up in the June to September quarter of this fiscal amid assurances of policy continuity after elections and improvements in business prospects, industry body Confederation of Indian Industry (CII) said quoting a survey of over 200 businesses from across sectors.

Improvement in business sentiment was noted among individual operations, the wider industry and overall economy. 

The survey report said better domestic demand led to the industry body’s business confidence index improving to 68.2 in the September quarter, up from 67.3 in the June quarter. The index was at 67.1 in the September quarter of the last fiscal. 

To be sure, the level of business confidence in the September quarter this year is a tad lower than that seen in the March quarter of FY24, when it stood at 68.3. 

The latest survey showed 59% of the businesses interviewed expected an improvement in private capital expenditure in the first half of the current financial year, from the year ago period. A significant third of the businesses expected it to stay unchanged.

More than three-fourths of businesses expect consumer price inflation to be lower than 5% in the current fiscal. Consumer price index (CPI) based inflation in August was at 3.65%, compared to 6.83% in the same time a year ago.

More than half the businesses surveyed expected an improvement in sales and new orders in the September quarter, while 45% expected a rise in profit and 46% expected their capacity utilization to be in the range of 75-100%. About 6% expected more than full capacity utilization in the September quarter, up from the actual 3% seen in the June quarter.

“Improvement in domestic demand has created a more optimistic business environment, encouraging companies to invest and expand,” said the survey report.

Almost half of the respondents anticipate an improvement in the hiring situation in their companies during the second quarter, the industry body said in a statement, adding that the upcoming festive season portends well for fortifying growth prospects further. 

Concerns

However, the industry body acknowledged uncertainty in global economic conditions warranted a careful watch. It flagged protracted geopolitical tensions, a spike in global commodity prices and slowing external demand as concerns. The survey was held in September. 

About 45% of the respondents expected their profits to improve in September quarter, a tad higher than the 42% who experienced a similar trend in the June quarter this fiscal. A third of the businesses felt profits to stay steady.

Nearly 17% of the respondents felt that improvement in consumption, especially rural demand, was poised to significantly bolster economic growth in the current financial year, the survey report said.

The economic survey for 2023-24 had projected a GDP growth rate of 6.5-7% in the current financial year, a tad lower than the 7.2% forecast by the RBI. Policy makers are pinning hopes on improved public expenditure in the remaining part of the financial year, improved monsoon, autumn and winter crops and replenished reservoir levels for supporting economic growth this fiscal.