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Indian business confidence high amid hope of stable govt

26 April 2014

Indian business optimism has climbed to its highest since 2010, as a significant majority of businessmen expects revenues to rise and profitability to get a boost in the next 12 months, according to a report by global consultancy firm Grant Thornton.

Indian business confidence high amid hope of stable govtBusinesses in the country are optimistic about their growth prospects as the country gears up for an election which is expected to return a more business-friendly administration, the Thornton report released today said.

At 89 per cent, optimism amongst Indian business owners remains well ahead of the global average of 44 per cent.

This optimism is driven by 92 per cent of Indian businesses expecting their revenues to rise in the next 12 months, while 87 per cent believe their profits will get a boost.

The hope of a stable government, and a significant reduction in the volatility of the Indian rupee have also boosted the optimism level, the report said.

While optimism has risen on several fronts, there are certain constraints being felt by businesses globally, the report said.

Rising energy cost is a pressing constraint for India, besides other factors such as shortage of finance, regulations/red tape, and lack of skilled workers.

Economic uncertainty remains a key constraint. However, the proportion of businesses globally citing this as a constraint to growth is down from 42 per cent to 38 per cent over the last three months.

"Appreciation in the rupee, dramatic reduction in the gold imports, stock markets near lifetime highs, and improved forecasts for medium term GDP growth have all helped boost business optimism," Grant Thornton India national managing partner Vishesh Chandiok said.

But Chandiok warned, "However the new regime will have its task cut out to demonstrate impact in the short term for the above to sustain, or else the sentiment will go down as quickly as it has improved.''

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