India’s economy showing signs of early recovery: CII survey

Confederation on Indian Industry's (CII) survey of business confidence - CII Business Confidence Index (CII-BCI) - rose to 54.9 in the third quarter (October-December 2013), from 45.7 in the previous quarter (July-September 2013), showing signs of an early revival in business confidence.

The survey, however, said that problems posed by supply side bottlenecks continued and that the downside risks to growth have still not abated.

About 58 per cent of the respondents of the survey expect an increase in sales in the third quarter, higher than the 45 per cent in the previous quarter. A majority of the respondents also expect input costs to increase. But, the percentage of respondents who expect increases in the expenses on raw materials, electricity, and wages and salaries had declined significantly from the last quarter, CII said in a release.

''With some positive signals emanating from the global economy, which find a resonance in our improved export performance and is causing our current account deficit to decline, we believe that the slowdown in the domestic economy may have bottomed out in the second quarter and the trend could reverse henceforth,'' said CII director-general Chandrajit Banerjee.

With an expected improvement in sales growth and moderation in input costs, 43 per cent of the respondents expect an increase in their pre-tax profit margin in the third quarter, higher than 31 per cent in the last quarter.

The survey respondents also expect the growth in exports to continue in the current quarter. Nearly 53 per cent of the firms expect their exports to rise in the current quarter, up from 49 per cent in the last quarter. Similarly, 56 per cent respondents didn't expect their imports to increase during the current quarter.

The survey found high inflation and low GDP growth as the main areas of concern. A majority of the respondents expected GDP growth in the current fiscal to be in the range of 4.5-5 per cent and inflation to remain high.

Among those surveyed, a majority of the respondents (63 per cent) were large firms, 12 per cent were medium-scale firms and the remaining 25 per cent were small units.

About 65 per cent of respondents were from the manufacturing sector, while 35 per cent were from the service sector.

The CII Business Outlook Survey, 85th in the series, covered over 174 industry members.