The Hindu Business Line : Corporates bullish on all fronts, says FICCI survey

GOING by the latest FICCI survey during the month of October 2003, corporate India is even more optimistic than in the last round of the chamber's Business Confidence Survey. "What was last time an undercurrent has now surfaced as the predominant sentiment," according to the second quarter 2003-04 BCS released by FICCI.

Corporate India is bullish on all fronts especially the country's economic performance, the survey stated. Sentiment of India Inc as measured by the FICCI's business confidence index is up by 6.9 per cent and stands at 76.2. "While the economy wide `feel good' factor is the key, the strengthening industry and firm level performance seen over the last few months have also contributed to this upbeat mood," the survey said.

Almost 90 per cent of the respondents have rated the current overall economic conditions to be moderately to substantially better than in the last six months. Expectations regarding the overall economic condition in the next six months reflect a similar strain of exuberance, with 84 per cent of the participating companies anticipating a moderately to substantially better performance on this front.

Further, the first five months of the current fiscal saw the industry sector grow by 5.6 per cent, the highest for the period for the last three years.

About 73 per cent of the respondents cited the current industrial performance vis-à-vis the last six months to be `moderately to substantially better'. Looking ahead, three-fourths of the participating companies feel their industry's performance would be `moderately to substantially better' in the next six months.

The quarterly business confidence survey elicited response from 564 companies. The turnover of the companies who participated in this survey ranged from Rs 1 crore to Rs 10,000 crore.

Sectoral analysis reveals that the performance of the heavy industry has improved notably. "This is an indicator of revival in investment activity and is in consonance with the firm level responses regarding the same," FICCI said. There has been a remarkable improvement in the domestic demand conditions. While 62 per cent of the respondents had complained about weak demand in the FICCI business confidence survey in the second quarter of 2002-03, in the latest survey the corresponding proportion has shrunk to 35 per cent.

Further, almost 80 per cent of the respondents were in favour of more bilateral FTAs similar to the one recently signed with Thailand. Corporates felt that while India should maintain its principled stand in multilateral fora like the WTO, it should also actively pursue bilateral trade agreements with cooperation based on the Ricardian principle of complementarity.

Corporate India has also taken the rising rupee in its stride. As per the survey, it prefers gaining a sustainable competitive edge through improved infrastructure and reduced transaction costs and not RBI intervention.

While 46 per cent feel that the appreciating rupee is having an impact on India's exports, another 39 per cent opined that the rupee's strength couldn't be blamed for the slowdown in India's exports in the current fiscal.

Interestingly of the 46 per cent who seemed concerned about the rupee exchange rate movement, about 48 per cent want RBI to intervene and slow down the rupee's upward movement.

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