Stagnation in investment plans key concern for India Inc

Stagnation in investment plans has emerged as a key concern in the current macro-economic scenario for India Inc, resulting in continuing decline in a key business confidence index.

The Business Confidence Index of the Confederation of Indian Industry (CII-BCI) declined by five points for the October-December 2011 quarter. The index has fallen in every successive quarter since the last quarter of 2010-11, and has tumbled by a cumulative 18.1 points.

''It is obvious that industry's outlook during the quarter has been poor,'' remarks Chandrajit Banerjee, director-general, CII. ''Hopefully 2012 would improve sentiments and outlook as we start seeing some positive developments including moderating inflation, a more accommodative monetary stance and hopefully a growth oriented budget.''

The CII survey, which is based on a large sample size of 250 companies, revealed that 37.2 per cent of the respondents expect GDP growth rate to moderate to 7.0-7.5 per cent, while 23.4 per cent expect it to be lower than seven per cent.

The bulk of the respondents (46.8 per cent) expect average inflation to be above nine per cent, and 35.8 per cent expect it to be in the range of eight to nine per cent in 2011-12. A mere 2.3 per cent expect it to be in the range of six to seven per cent.

Most firms quizzed in the survey expect domestic and international investments to decline or remain stagnant in the quarter ending December 2011. Of those who said domestic investments would fall or stagnate, a majority were small firms.