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NEW DELHI, Dec. 13

BUSINESS confidence that had strengthened during the beginning of the year has not weakened despite the sluggish monsoon and the prevailing uncertainty in the global economy.

This has been indicated in the 58th business outlook survey conducted by the Confederation of Indian Industry (CII). A majority of the respondents felt that industrial growth would continue to move upwards during the second half of the current fiscal. A majority 51 per cent of the respondents felt that the general business prospects for their company would improve over the next six months. However, 41 per cent of the respondents felt that the same trend would continue and only eight per cent felt that they would experience a worsening in the general business prospects for their company.

Sectoral analysis showed that capital goods and intermediate sectors would exhibit higher growth in the next six months.

The survey shows that a majority of the respondents (54 per cent) are looking at fresh capital investments in the existing business units. The fresh investments would largely be fed by the expectations of a pick-up in both domestic and international demand. However, most of the investments are expected to be capital-intensive, as 57 per cent of the respondents have said that the level of employment would remain constant over the next six months. The respondents have said that poor domestic economic conditions and policies would be a significant deterrent to achieving higher levels of output. The survey also shows that on the infrastructure front, power remains a problem area. In spite of adequate liquidity, high interest rates and reluctance to lend by banks continue to hamper easy access to finance.

The survey shows that in the past six months, lack of orders and prevailing global and domestic economic and political scenarios have been the primary factors limiting the level of output. On an index of 1-to-6, where 1 is the most limiting and 6 is the least limiting factor, the average rating received by `lack of orders' and `domestic economic and political scenario' are 2.8 and 2.7, respectively indicating them to be the most limiting factors.

The high rate of interest is the most significant factor impeding easy access to finance, the survey shows. On a six-point index, it has received an average rating of three.

On the overall GDP growth of the economy, 50 per cent of the respondents pegged the overall growth of the economy for 2002-03 at between 4.5-5 per cent, 46 per cent felt that the growth would remain between 5 and 6 per cent and four per cent felt that growth would cross the six per cent mark during the current year.

The survey, which is done twice a year, covers all industry sectors, including small, medium and large enterprises from different regions. It contains responses from 153 member companies and relates to the actual performance of industry during April-September 02 and the forecast for October 02-March 03. A majority of the respondents (32 per cent) were from north India, followed by western region (29 per cent), southern region (26 per cent) and eastern region (13 per cent).

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