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Business News/ Politics / News/  Ficci business confidence index hits a new low
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Ficci business confidence index hits a new low

Ficci business confidence index hits a new low

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New Delhi: India Inc’s confidence seems to have hit a new low according to the findings of the latest business confidence survey conducted by Ficci in March 2008 for the third quarter of the fiscal year 2007-08. Half of the 392 companies participating in the survey said that overall economic conditions have deteriorated over the last six months compared with around a fifth in the last survey. Close to a third felt that the situation would worsen over the next six months with 38% believing that current economic status will remain the same over the next six months. The reasons cited for the reaction include an appreciating rupee, a high interest rate regime and the rising cost of industrial inputs and raw materials.

However, more than half (54%) of the participants reported increasing investments over the coming six months compared to a third who felt so in the previous survey. This improvement in the investments index is largely due to the higher reported investments by members from the heavy industry, says Ficci.

New all time lows

The values of the three indices computed by FICCI had declined to a five-year low in the last survey. They have moved down only further in the present survey. The Current Conditions Index dipped from 59.3 in the last survey to 54.5 in the current survey. The Expectations Index has moved down from 62.2 in the last round to 55.7 in the current round. The Overall Business Confidence Index has recorded a decline from 61.2 in the last survey to 55.3 in the present survey.

As a consequence, many firms are expected to increase prices in the coming months. More than half (56%) feel that the Rupee’s appreciation has dented their competitiveness.

The outlook for profits has taken a beating with almost 38% of the participating companies reporting a likely dip in profits in the coming six months. Nearly a third of the participating firms from the heavy industry sector also reported that they would see a fall in their profits over the next six months.

Among the three sectors it is the heavy industry from where several participating companies reported a likely increase in their selling prices over the next six months The costs build up across sectors and companies has been quite evident. The rising prices of commodities and inputs are giving a tough time to companies in several sectors. Faced with these pressures on the cost front nearly 31% of the companies are planning to hike prices over the next six months. (For extended survey details, click on hyperlink)

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Published: 28 Apr 2008, 10:48 AM IST
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