India Inc’s business confidence is at a 14-quarter high ahead of the maiden budget of Narendra Modi government that the corporates expect to be “pro-growth”.
Ficci’s Business Confidence index value climbed to a 14-quarter high of 69 in the current round, up from 60.8 in the previous survey, with a whopping majority of 93 per cent participants anticipating the overall economic situation to be ‘moderately to substantially better’ in the coming six months.
“A clear mandate in elections, followed by a slew of announcements undertaken by the government has lifted the spirits of industry members. However, going ahead it will be imperative to back these announcements with speedy and timely action,” industry body Ficci said.
The participating companies maintained that they expect the Budget to be “pro-growth” giving due focus on ironing out the issues faced by the industry and investors.
The survey results pertain to key operational parameters including sales, profits, investments, employment and exports, and participating companies indicated that most of these parameters are steering towards an upturn.
Investor sentiment, which had taken a sharp hit in the past, seems to be recuperating, as a plunge was noted in the percentage of participating companies anticipating investments to decline in near term. About 6 per cent respondents indicated lower investments over the next two quarters. The corresponding figure was 20 per cent last time.
Also, 40 per cent companies said that they foresee higher investments over the next two quarters, vis-a-vis 24 per cent stating likewise in the last round. Outlook of companies with regard to employment and exports also showed an improvement.
However, nearly 74 per cent companies said that demand situation continues to be frail as compared to 70 per cent companies in the previous round. However, about 72 per cent of the respondents said that they expect their order book position to recover over the next six months.
The situation with regard to availability and cost of credit also seems to be improving, with 25 per cent respondents citing availability of credit as a concern area as against 40 per cent last time.
Some of the key suggestions by participating firms in the Union Budget 2014-15 include simplification of taxes, early roll out of Goods & Services Tax, reviewing the Direct Tax Code, boost to infrastructure sector and allocation of more funds for power projects.
Other recommendations include incentivising states to amend and implement Agriculture Produce Marketing Committee Act, checking fiscal deficit, controlling subsidies, a re-look at Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) and drawing up a focussed Disinvestment Plan.
Promotion of manufacturing and MSMEs, skill development, developing ports and providing a fresh impetus to Special Economic Zones were also on the budget wishlist.
