New Delhi: Unfazed by prospects of further rise in interest rates, Corporate India is “brimming with confidence,” keeping investment on track with strong balance sheet and a buoyant capital market in the next six months, a Ficci survey said on Sunday.
Results of the Ficci’s Business Confidence Survey of 359 companies for the second quarter of fiscal 2010-11 showed that even though 86% of them expected the lending rates to further go up, 75% said investments would go ahead as planned.
“The confidence level of corporate India is on the upswing...companies are brimming with confidence and are expecting to up a good show in the next two quarters”, it said.
In fact, half of those covered in the survey said that they would even “scale up their investment in the next six months.”
The RBI is scheduled to review the monetary stance again on 2 November.
Indian economy grew by 8.8% in the first quarter of the current fiscal and the year is expected to end with a GDP (Gross Domestic Product) expansion of 8.25-8.50 %, by different estimates, including RBI.
In the backdrop of high inflation the central bank has increased the short-term lending and borrowing rates five times since February.
Survey participants said that companies have several other avenues and “some of which are more competitive as compared to bank lending for raising resources.
“The good performance of the stock market makes issuance of fresh equity an attractive option for firms to raise funds,” Ficci said.
Further, given the large interest rate differential that exists between India and western countries, raising funds through the ECB route is another option for firms planning to undertake investments, it said.
“Also, as banks have raised their lending rates, companies are raising money through issuance of commercial paper and corporate bonds,” it said.
Besides, many mid and large-sized Indian firms are in a cash surplus position and they will use these internal reserves for proposed investments.