Biz confidence improves moderately in Q1 FY13: CII

Out of 200 respondents, about 42 percent said India's economy would grow by 7-7.5 percent during 2012-13.

Updated: Apr 29, 2012, 14:10 PM IST

New Delhi: Expectations of increase in investments and improvement in capacity utilisation have moderately boosted the business confidence of Indian corporates, a CII report said.

"Compared to a value of 62.5 in the first quarter of 2011-12, the index reported a value of 55 in April-June, 2012," the chamber said in its report.

Out of 200 respondents, about 42 percent said India's economy would grow by 7-7.5 percent during 2012-13.

About 29 percent expects inflation in 2012-13 to fall to below 7 percent, from 8.8 percent in 2011-12, it added.

"...Respondents expect to increase domestic investments during April-June 2012...58.7 percent expects capacity utilisation to be above 75 percent in the first quarter of 2012-13," it said.

It said there was an increase in overall sales, new orders and pre-tax profits in the last quarter of 2011-12 and these indicators are expected to continue increasing in the first quarter of 2012-13.

"Most firms kept employment levels unchanged in the quarter ending March 2012 but are expected to increase employment in the quarter ending June 2012," the report said.

However, it said that rising input costs continues to be a major worry for firms.

"Majority of the firms recorded an increase in electricity/fuel cost and cost of wages and salaries during January-March, 2012," it added.

Similarly, it said, a worrisome trend has emerged on the back of tight monetary conditions.

Majority of the firms registered a stagnation or decline in availability of credit during January-March 2012, it said, adding, "expectations for April-June, 2012 show that majority continue to expect availability of credit to be a problem".

It said the implementation of key reforms in the areas of indirect taxation, pricing of administered products and increasing FDI limits would go a long way in raising business confidence and improving the growth outlook for the economy.

Further it said that although the business index value is showing a moderate recovery for the past two quarters, "it remains at a depressed level and far below the levels achieved in the previous year".