New Delhi: Corporate India`s confidence on
the state of economy is on an upswing with a majority of the
companies surveyed by industry body FICCI agreeing that the
government stimulus has spurred economic activities.
"Going ahead India would see an improvement in its growth
performance," the chamber`s Business Confidence Survey for the
first quarter of 2009-10 said.
The business confidence index for April-June period moved
up to 67.2 from 64.1 in the last quarter of 2008-09.
However, poor progress and spread of monsoon this year
could be a dampener for the economy, it found on the flip
With regard to expectations about the overall economic
conditions, the survey said, "We see that close to 73 percent
of the companies feel that things would improve in the coming
With major segments of the economy posting good growth
numbers in the first quarter of this fiscal and global
recession showing signs of easing, performances are likely to
improve in the near term.
Four out of five respondents felt that the fiscal stimulus
measures announced by the government are having a tangible
effect with India`s economic performance, it said.
In the first quarter of this fiscal, India`s GDP grew by
6.1 percent despite the global financial meltdown.
In the survey 372 companies from sectors like textiles,
cement, steel, leather, chemicals and fertilizers, oil and
gas, auto and machinery are participated.
The Ficci survey said besides weak demand the other
factors that are adversely affecting the performance of
industry are rising cost of raw materials, manpower and
high cost of credit.
"With regard to availability of credit, we see that about
27 percent of the companies (mainly in the SME sector) are
feeling constrained on this account," FICCI said.
A large proportion of the companies covered in the survey
felt that high fiscal deficit and the massive borrowing
programme of the government may lead to hardening of interest
rates and crowding out of the private sector from the credit
market in the coming months.
Recently the Planning Commission had said the fiscal
deficit, the difference between total revenue and expenditure,
will not exceed the budgetary estimate of 6.8 percent of
gross domestic product (GDP).
During the current fiscal, the government had decided to
borrow Rs 4.5 lakh crore from the market, up from Rs 3.1 lakh
crore in 2008-09. A higher fiscal deficit would mean
taking more loans from banks at the cost of industry and other