The Hindu Business Line : Business confidence up on sound economy, says CII outlook survey

A SOUND performance of the economy in the past six months together with improved current situation and perceptions of higher growth and capacity expansion are the reasons for the strong business confidence that prevails in the country, says a recent Confederation of Indian Industry's 64th business outlook survey.

CII 's business confidence index at 65.7 was higher for the period September 2005-March 2006 with an increase of 1.5 points compared to the previous period April-September 2005.

The firms expect GDP growth for 2005-06 to be more than 7 per cent. This was revealed by most of the respondents. The survey also revealed that 80 per cent of the respondents plan to increase investments during the second half of 2005-06. Capacity utilisation across the board has increased and about 60 per cent have expressed confidence that capacity utilisation for the second half of 2005-06 will be up to 100 per cent and yet another 19 per cent expressed confidence that capacity utilisation will exceed 100 per cent.

The value of production is also expected to increase in the next six months, said 80 per cent of the respondents. In fact, for 66 per cent of the respondents, production increased in the first half of 2005-06. Further increase in production is likely because of expected increase in new orders. The second half is expected to be better in terms of increase in new orders as 84 per cent of the respondents expected new orders to increase in the next six months, while about 65 per cent revealed that new orders had increased in the first half. Employment is also expected to increase in the second half of this financial year.

This was expressed by 84 per cent of the respondents, who expected employment to increase in the second half, while 44 per cent of them said that employment had increased during the first half of this financial year.

However, 70 per cent felt that the procedural delays for corporates have not reduced.

These raise transactions costs and need to be addressed urgently, said survey respondents.