CII’s business confidence index has increased to 66.1 in the April-June quarter as compared to the previous quarter. It was at 64 in the January-March quarter. Growth in data such as Goods and Services Tax (GST) collections, air and rail passenger numbers shows a positive trend.
63 percent of the 180 companies included in the business outlook survey of the Confederation of Indian Industry (CII) say that India’s gross domestic product (GDP) growth rate will be six to seven percent in the current financial year. However, this is lower than the figure of 7.2 per cent in the previous financial year. Uncertainties at the global level will also affect India’s growth rate.
The survey said, “To maintain the pace of growth, it is necessary that the central bank does not change the key policy rates.” 53 percent of the companies involved in the survey expect the Reserve Bank to maintain status quo on the key interest rate front in the first half of the current financial year.
65 percent of the companies involved in the survey said that the pace of private investment will continue in the current financial year.
The results of the survey also reveal that 62 per cent of the companies believe that global growth will remain sluggish. Geo-political crisis will be a major business concern in the current financial year.
CII Director General Chandrajit Banerjee said, “The positive trend seen in the CII’s Business Confidence Index in the first quarter of the current financial year is encouraging. Improvement in demand has increased capacity utilization in many sectors, which will give further impetus to private investment this year.
According to the survey, holding on to interest rate hikes by the Reserve Bank is expected to bring down the cost of capital for Indian industry, leading to fresh investments and increased private capex.
More than half of the companies involved in the survey, i.e. 52 percent, believe that the capacity utilization will be between 75 and 100 percent in April-June. In the previous quarter it was 45 percent.
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