Economy

‘Indian companies optimistic of economic recovery in 2017’

BRIGHT FUTURE: India also ranked number one on the parameter of employment expectation.

BRIGHT FUTURE: India also ranked number one on the parameter of employment expectation.

Indian businesses are optimistic about an economic recovery in 2017, according to the latest Grant Thornton International Business Report (IBR) survey.

India ranked second on the optimism index during the third quarter (July-September 2016) and has taken a further leap to first position this quarter with 88 per cent of the respondents voting for it.

The country continues to retain its number one position in the fourth quarter of 2016, a trend that was seen in the corresponding period in the year 2015 and 2014 as well, according to a statement by Grant Thornton.

The findings are based on a global business survey conducted quarterly.

The recent survey had 2,600 businesses in 37 economies.

“The rise in optimism in India can also be gauged from the fact that India tops the chart on expectations of an increasing revenue (89 per cent) where it slipped to third position in the July-September quarter.”

The country also ranked number one on the parameters of employment expectations (62 per cent) and selling prices (68 per cent). India Inc.’s profitability expectations further moved to second position from rank three in the third quarter and fourth position during the second quarter of 2016.

High on expectations

“India continues to stand out as the one economy which has huge potential to continue to grow and this is reflected in the survey where Indian businesses are most optimistic and high on expectations of increasing revenue, employment, profitability.

“This is a great time for the policy makers to look at unleashing the next generation of reforms, apart from GST, mostly focussed on ease of doing business and minimum government, maximum governance,” said Harish H.V., Partner – India leadership team, Grant Thornton India LLP.

However, Mr Harish said, that requires a change in mind-set among the policy makers and implementing reforms in the legal system and contract enforcement (India’s poorest ranking is in contract enforcement in the doing business ranking).

Pessimism on exports

While business confidence in India is rising, the optimism for an increase in exports has plummeted. According to the survey report, 28 per cent of the respondents expect an increase in exports, which is 10 points lower than previous quarter (38 per cent voted for an increase in exports during third quarter of 2016).

Although India ranks third on citing regulations and red tape as a constraint on growth, there is a constant decline in the number of respondents citing this as an impediment to growth.

Fifty-seven per cent of the respondents have quoted this as an obstacle against 59 per cent and 64 per cent, in the third and second quarter of 2016, respectively.

The survey highlighted that lack of strong ICT infrastructure, shortage of orders, unavailability of workforce and shortage of finance were the biggest concerns for corporations in India.

Higher R&D

According to IBR, 38 per cent of the respondents are expecting an increase in investment in R&D activities. Though it shows a decline from the last quarter (43 per cent), on an average, there is an increase in optimism for R&D activities in 2016.

The survey showed no change in the confidence of an increase in investments in new buildings from the last quarter. Forty-two per cent of the respondents were expecting an increased investment in new buildings in this quarter as well. When it comes to investment in plant and machinery, 50 per cent respondents expect a rise as against 46 per cent in the third quarter.


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Printable version | Sep 26, 2022 2:58:38 am | https://www.thehindu.com/business/Economy/%E2%80%98Indian-companies-optimistic-of-economic-recovery-in-2017%E2%80%99/article17005507.ece