NEW DELHI: Higher economic growth boosted confidence among Indian businessmen in the October-December quarter, but rising input costs and interest rates dampened the investment outlook, a survey by an industry lobby group said.
The survey of 320 companies by the Federation of Indian Chambers of Commerce and Industry (Ficci) showed the main business confidence index rising to 75 points for the third quarter of 2006-07, from 72.1 points during July-September.
The index was at its peak at 76.6 points in the quarter ended December 2005, but declined during January-June 2006.
“Enthused by the strengthening economic profile of the country with consistent high economic and industrial growth, all the confidence indices are in ‘significant optimistic’ zone,” said the quarterly survey, released on 11 February. India’s industrial output grew by 11.1% in December from a year earlier, government data showed on Monday. The Centre expects gross domestic product to rise by 9.2% in the fiscal year to March 2007.
At end-December, the expectations index, which reflects firms’ outlook for the next six months, rose to 75.7 points, from 71.3% in September. It was 77.7 points in December 2005.
The current conditions index was 73.7 points in December 2006 from 73.8 points in September.
The Ficci showed Indian firms absorbing the rise in input costs to keep product prices steady but a majority of them expected a squeeze in profit margins.
The profit index declined to 43 points in December from 46 points in September, while the sales index rose to 76 points from 74 points during the same period.
But the investment index dropped to 39 points in December from 50 points in September. “The outlook on investment has taken a hit owing to spiraling capital goods prices coupled with rising costs of credit,” the survey said.
The employment index stood at 29 points in December, the same as in September.