India slips to 3rd place in business optimism rankings

16 July 2016

After topping the global business optimism rankings for the last two quarters, India slipped to third place in the April-June quarter of 2016, the latest Grant Thornton International Business Report (IBR) says.

Delays in key reforms like the goods and services tax (GST), non-resolution of tax disputes, banking issues due to stressed assets resulting in a weak outlook for banks and need for significant recapitalisation of public sector banks are some of the main concerns of corporate India that have impacted the overall business optimism, according to the report.

"This is a clear signal that while there is optimism in the market and great business opportunity in India, the issue that is bothering investors is the slow progress on key reforms, simplification of tedious government processes and regulatory uncertainties which is impacting India's ranking," said Harish H V, partner, India leadership team, Grant Thornton India LLP.

''The passing of GST bill which we hope will happen in the current parliament session should reverse this trend," he added.

 The report is based on the results of a quarterly global business survey of 2,500 businesses across 36 economies.

According to the report, India continues to top the chart on expectations of increasing revenue. Ninety-six per cent of the respondents voted in favour of increasing revenue.

The survey report indicates increased expectations for upsurge in selling prices in India. On this parameter, India ranked second in April-June quarter against third in January-March.

However, growth in employment expectations dropped to second position from the top rank in the previous quarter.

The optimism also slipped to fourth position in profitability expectations from the third.

While the business confidence in India has declined, there is a tremendous rise in optimism for increase in exports. According to the report, 35 per cent of the respondents expect a rise in exports compared to 13 per cent in the last quarter.

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