CII Biz Confidence Index rebounds to two-year high

Press Trust of India

New Delhi: The latest CII Business Confidence Index for the October-December quarter rebounded to its highest reading in almost two years of 67.6 from 62.2 in the previous quarter, reflecting optimism around India being in a ‘sweet spot’ despite the rising global uncertainties, the industry body said on Sunday. The sharp improvement in the value of the index was buttressed by subsiding of concerns around the impending recession and its impact on the Indian economy, CII stated.

The Index is based on the findings of a survey of over 120 firms of varying sizes and across all industry sectors and regions of the country. However, a majority (70 percent) of the survey respondents feel that the Indian economy will expand in a range of 6.5 percent to 7.5 percent in the current financial year ending March from 8.7 percent in the last fiscal.

“Growth is expected to moderate further in the next year on global headwinds. Hence, to support growth, it is critical that RBI refrains from raising the interest rates any further,” Confederation of Indian Industry stated. The latest first advance estimates of GDP for the current fiscal put the GDP print at 7 percent.

Nearly half of the respondents (47 percent) have indicated that they have already started feeling the impact of the policy rate hikes by the RBI on the overall economic activity, revealed the survey. High interest rates have impinged on private investment levels too. Currently most of the heavy lifting to support growth is being done by public capex, with private capex playing a supporting role, said CII.

Even as global economic growth is witnessing headwinds due to the tightening financial conditions and geopolitical tensions, an overwhelming 73 percent of the survey respondents expect only a moderate impact on the Indian economy.

The confidence among the respondents stems from the fact that 86 per cent believe the government’s focus on infrastructure is the biggest positive for the Indian economy, followed by improvement in tax collections and good consumption recovery, said CII.

In addition to high borrowing costs, the prevailing heightened uncertainty has prevented firms from furthering their investment plans.