FICCI survey shows Indian business sector confidence has grown
New Delhi:
Industry body FICCI’s latest Business Confidence Survey reports an improvement in the confidence level of the Indian corporate sector, with the overall business confidence index at 67.6 in the current round compared to 63.9 earlier.
The survey finds an improvement in both current conditions and the expectations of Indian companies in the latest round. The Current Condition Index improved to 66.1 from 62.6 in the latest survey, while the Expectations Index improved to 68.4 from 64.5, the Federation of Indian Chambers of Commerce and Industry (FICCI) said in a media statement.
The survey – conducted in April 2022 – gauges respondents’ expectations for the period April through September 2022. The survey participants belong to a wide range of business sectors.
The findings reflect improved near-term confidence among industry members in a number of operational parameters, including sales and investments. For example, the proportion of respondents expecting better short-term sales prospects was 62 percent in the current survey — up from 50 percent in the previous round.
As the latest survey results show, the demand situation is gradually improving. In the current poll, 46 percent of participants cited a weak question as a limiting factor versus 60 percent who claimed the same thing in the previous round and about 70 percent who said the same thing last year.
Furthermore, the investment prospects of the participating companies have also shown a noticeable improvement. Just over 50 percent of the respondents expect higher investments compared to 40 percent that was also indicated in the previous round.
Improvements are also noted with regard to the capacity utilization parameter, with 45 percent of the respondents in the current survey round indicating an occupancy rate of more than 75 percent. In the previous round it was 30 percent.
However, rising commodity prices amid ongoing geopolitical tensions weigh heavily on the short-term outlook for earnings. As a result, the percentage of participants who cited higher profits in the next six months fell to 22 percent in the latest survey, from 30 percent of respondents in the previous round.
The geopolitical tension creates great uncertainty. The Russia-Ukraine conflict is affecting already high global commodity prices and has raised new concerns about the global recovery. In addition, production costs have already risen over the past six months and the current conflict has further increased upward pressure on the prices of key industrial inputs.
About 84 percent of the participating companies indicated in this survey that higher raw material costs are a significant obstacle to their business. In the previous round it was 82 percent.
Furthermore, 48 percent of respondents said they had witnessed an increase in their production costs by a margin of more than 10 percent. On the other hand, about 43 percent indicated an increase of 5 to 10 percent, while 9 percent of respondents indicated an increase in production costs of up to 5 percent.
The participants underlined the increasing difficulties in enduring rising cost pressures; the same is passed on to consumers, while 77 percent of participants acknowledge that higher costs are passed on to consumers.
Of the companies that passed on the share of the increase in their total costs to consumers, about 57 percent said they passed on 10 percent of the higher costs to final consumers (versus 34 percent said the same for the two quarters ago). while 22 percent of respondents said they passed on more than 20 percent of the cost increase to their consumers.
However, about 43 percent of participants said they passed on only less than 10 percent of the increased costs to their customers. The corresponding number about two quarters back was 66 percent.
(Except for the headline, this story has not been edited by DailyExpertNews staff and has been published from a syndicated feed.)
