Industry body FICCI’s latest Business Confidence Survey reports an improvement in the confidence level of India’s corporate sector, with the overall Business Confidence Index at 67.6 in the current round as compared to 63.9 in the earlier.
The survey in its latest round has found an improvement in both the current conditions and the expectations of Indian companies. The Federation of Indian Chambers of Commerce and Industry (FICCI) said in a media statement that the current situation index increased to 66.1 from 62.6 in the previous survey, while the expectation index increased to 68.4 from 64.5.
The survey – conducted during April 2022 – assesses the expectations of the respondents for the period April to September 2022. Survey participants belong to a wide range of business sectors.
The findings reflect improved confidence among industry members in the near term on certain operating parameters, including sales and investments. For example, the proportion of respondents expecting better sales prospects in the near future in the current survey was 62 percent — up from 50 percent in the previous round.
As reflected in the latest survey results, there is a progressive improvement in the demand conditions. In the current survey round, 46 per cent of participants cited weak demand as a bottleneck factor, compared to 60 per cent reporting similar in the previous round and nearly 70 per cent citing the previous year.
In addition, the investment outlook of the participating companies has also improved significantly. A little over 50 per cent of the respondents expected a higher investment than the 40 per cent reported in the previous round.
Improvement has also been observed on the capacity utilization level parameter, with 45 per cent of the respondents indicating a capacity utilization of more than 75 per cent in the current survey round. In the previous round it was 30 per cent.
However, rising raw material prices amid ongoing geopolitical tensions is weighing on the near-term outlook for profits. As a result, the percentage of participants citing higher gains over the next six months dropped from 30 percent in the previous round to 22 percent in the latest survey.
Geopolitical tensions are creating a lot of uncertainty. The Russia-Ukraine conflict affects already high global commodity prices and has raised new concerns about a global recovery. Moreover, the cost of production has already been rising for the past six months, and the current conflict has increased the pressure on the prices of key industrial inputs.
About 84 percent of the companies that participated in the current survey cited the high cost of raw materials as a significant barrier to their businesses. In the previous round, this figure was 82 percent.
Further, 48 per cent of the respondents said that they have seen their cost of production increase by a margin of more than 10 per cent. On the other hand, about 43 per cent pointed to an increase between 5 per cent and 10 per cent, while 9 per cent of the respondents pointed to an increase of up to 5 per cent in the cost of production.
Participants outlined the increasing difficulties in coping with rising cost pressures; It is being passed on to the consumers, while 77 percent of the participants accepted the passing of the higher cost to the consumers.
Of the companies passing an increase in their total cost to consumers, about 57 percent said they had passed on more than 10 percent of the increased cost to end consumers (compared with 34 percent of about the same amount). stating) two quarters ago) while 22 per cent of the respondents reported that they have passed on more than 20 per cent of the cost escalation to their consumers.
However, about 43 percent of the participants said that they passed on only less than 10 percent of the increased cost to their customers. About two quarters ago, this number was 66 per cent.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)