Indian business shelving investment plans: survey

Indian corporate houses are holding back their cash reserves and postponing investment plans as they feel the current global economic crisis will worsen before it gets better, reveals a survey by the Federation of Indian Chambers of Commerce and Industry.

Indian business fears that the meltdown will snowball into a full-blown crisis next year, and the investment climate won't get better till the end of 2012, the survey released on Christmas Eve found.

According to the survey, titled Global meltdown and its impact on Indian industry, 83 per cent of the respondents said there is a long and arduous road ahead for Indian trade and industry.

The uncertain economic outlook has resulted in 50 per cent of businesses holding higher cash balances than usual. Of those who acknowledged hanging on to their cash, nearly 82 per cent respondents were large corporate houses.

"An increase in cash balances implies that corporates are holding on to their investment plans for better future opportunities. Alternatively, when credit is scarce, or expected to be scarce, firms hold on to more cash to meet any potential eventualities," the survey said.

The survey conducted during September and October across several sectors comes in the backdrop of the industrial production growth slowing down 5.1 per cent in October, compared to 11.3 per cent in the same month last year.