The Reserve Bank of India said that the ongoing momentum in economic growth is likely to remain robust in the rest of 2006-07 along with expectation of lower increase in selling prices, exports and imports.

In its latest Industrial Outlook Survey, the RBI has revised upwards the business expectations indices, based on assessment for October-December 2006 and on expectations for January-March 2007 by 2.7 per cent and 1 per cent, respectively, over the previous quarter. This is in line with other business confidence surveys, which also suggest that economic activity is likely to remain buoyant in the near term.

The RBI, in its third quarter review for 2006-07, said the financial situation was expected to show an improvement, as the higher working capital finance requirement was expected to be met by improvement in the availability of finance. The expectations of increase in selling prices, exports and imports had, however, moderated over the previous quarter.

The improvement in expectations index, January-March 2007, was backed by higher net responses for major parameters of the survey like overall business situation, production, order books, capacity utilisation, employment, and profit margins over the previous quarter.

After having declined previously in the aftermath of volatility in stock market and elevated oil prices, business confidence indices compiled by various agencies recovered on the back of rebound in the stock market, decline in international crude oil prices from their record highs, close-to-normal monsoon, strong economic growth, high level of capacity utilisation and improved expectations of financial performance, said the RBI.

Dun & Bradstreet's composite business optimism index for the period January-March 2007 increased by 9.8 per cent over the previous quarter. Around 94 per cent of the respondents anticipated an increase in profitability, while 95 per cent anticipated an increase in sales volume. The National Council of Applied Economic Research's  business confidence index for October-December 2006 rose by 3.2 per cent over the previous round.