Despite optimism about export prospects, investments and recruitment in the next six months, India Inc's business confidence index fell in the fourth quarter of fiscal 2004-05 compared to the previous period, a FICCI survey said on Monday.
The sentiment of corporate India is psychologically constrained by a confluence of factors, including VAT, continuation of central sales tax, fringe benefit tax and rising input costs, which are mainly oil-driven, FICCI Business Confidence Index said.
Corporate India's confidence index fell to 71.6 in the fourth quarter as against 75.6 in the third quarter, it said.
According to the survey, the current conditions index fell to 67.5 in fourth quarter from 73.4 in the third quarter.
The expectations index also registered a decline to 73.6 from 76.7 in the previous quarter.
The study, however, said India Inc exuded optimism on the export front with 58 per cent of companies surveyed expecting rise in their exports and 32 per cent looking to sustain their current levels.
The export index stood at 48 in the fourth quarter as against 41 in the previous one, it said.
On the investment front, 51 per cent of respondents sounded out new plans for investments. The investment index increased by two points at 42 from the last quarter.
The survey showed increase in employment index in the fourth quarter at 23 as against 13 in the previous quarter.
"There has been an increase in the proportion of firms intending to add to their present employee headcount from 25 per cent in the previous round to 30 per cent this time," the survey said.
On capacity utilisation, the survey said 69 per cent of respondents reported more than 75 per cent utilisation in the fourth quarter as against 62 in the third one.
Availability of credit was not bothering India Inc with 91 per cent of respondents reporting no constraints and 81 per cent stating cost of credit was not high, it said.
The survey, which took into account responses of 428 companies with turnover ranging between Rs 1 crore and Rs 60,000 crore (Rs 600 billion), said India Inc's outlook for industry performance in the near future is positive with 70 per cent looking forward to much better performance.
It said 71 per cent of respondents expected higher sales in next six months. While 30 per cent foresee increase in prices, 55 per cent said they would maintain the current prices.
The survey said 49 nine per cent of respondents expected higher profits in next six months.
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