NEW DELHI: Private companies in India remain optimistic about growth prospects in the year ahead, but the level of confidence has taken a beating on concerns over challenging conditions in India and abroad, says a survey.
Amid subdued confidence, net balance for business activity among Indian companies is down from 16 per cent in February to 15 per cent in June — its lowest in the survey history and the weakest of all four BRIC economies.
“June outlook figures show that Indian private sector firms maintain an optimistic view about business prospects over coming 12 months. However, confidence levels have slipped slightly, with sentiment for activity, business revenues and profitability all dropping to new survey lows,” Pollyanna De Lima, Economist, Markit, said.
Weighing on overall sentiment are concerns regarding sustainability of economic growth, weak underlying demand, competitive pressures, fuel prices, delayed payments from clients, uncertainty in global markets and higher tax rates, the Markit India Business Outlook survey said.
Business revenues are projected to rise with a net 13 per cent of private companies foreseeing growth, but down from 14 per cent in February.
On profitability growth also, confidence among Indian businesses has slipped to a new record low. The net balances for both manufacturing and services are at 14 per cent, down from 18 per cent and 15 per cent, respectively.
“Companies are also worried about inflationary pressures building up and have, therefore, revised their cost inflation expectations slightly higher. Restricted by competitive pressure, however, businesses anticipate only a modest increase in output prices, with expectations unchanged since February,” Lima added.
The outlook data for June show that companies plan to increase capital spending over the next 12 months.
Meanwhile, in line with expected growth of new job orders and activity, Indian companies plan to hire additional workers over the next year.
“Although the economic upturn is set to be supported by favourable government policies and expected increases in public projects, business confidence is hampered by concerns regarding challenging conditions in India and abroad,” Lima said.
The survey noted that businesses in India see government policies, rising tourism in India, new projects for the public sector, expansion plans and new client wins as opportunities for growth.