New Delhi: Over 40% of Indian companies surveyed by industry chamber CII are expecting that the Reserve Bank will go in for a further hike in interest rates in the current fiscal.
The survey, conducted during July-September 2018, covered nearly 200 firms of varying sizes, the CII said while releasing its 104th edition of quarterly Business Confidence Index (BCI).
The BCI also shows that companies are more than just optimistic “about the return of good times" during the second quarter of the current fiscal, an indication of rising confidence about the future growth trajectory and business prospects.
After the 50 basis points interest rate hike by the RBI in the previous two monetary policy review meetings, the sentiment about further monetary policy action seems to have changed, the industry chamber said in a statement.
“In the current survey, about 42% of the respondents felt that the RBI will engage in further interest rates hikes in 2018-19 as compared to the previous survey where a majority of the respondents anticipated a cut or no change in policy rates in 2018-19," it said.
RBI Governor Urjit Patel-headed Monetary Policy Committee will start deliberation on the fourth bi-monthly monetary policy for 2018-19 on 3 October and announce its decision on 5 October.
As per the industry body, BCI has touched the series high of 64.9 as against 60.1 in the last quarter. “The significant uptick in the index, for the fourth consecutive quarter, is an indicator that business sentiment is upbeat," it added. Commenting on rise in business confidence, CII Director General Chandrajit Banerjee said there is a definite improvement in the tempo of business activity, powered by expectations of improved consumption and investment growth. A steep rise in business confidence reflects positive vibes within industry about the business environment, he said.
“It underscores the hope that the facilitative government policies would result in faster rise in output and new orders which would spawn a host of business opportunities for firms and business units both in India and abroad," Banerjee opined.
Amidst indications that the economy is on the “cusp of a turnaround", nearly two-thirds of respondents (64%) opined that GDP growth will lie in the range of 6.5-7.5% in 2018-19. Among them, a large proportion (36%) expect GDP growth to lie in the range of 7-7.5% while about 28% foresee GDP growth in the 6.5-7% range. Around two-thirds of the firms (65%) anticipate an improvement in private sector investment activity in the remaining quarters of 2018-19.
Of these, 26% feel that an improvement in investment activity is already visible while the remaining 16% and 23% of the respondents anticipate a pick-up in the remaining two quarters of 2018-19.
(This story has been published from a wire agency feed without modifications to the text. )