Survey conducted by FICCI revealed plunge in Business Confidence in India to Two-year Low

According to a survey conducted by Federation of Indian Chambers of Commerce and Industry (FICCI) in July 2011 revealed that business confidence in India has plunged to two-year low. The dip in business confidence was attributed to high interest rates, frustration with governance, land acquisition issues and eroding pricing power in an inflationary environment.

The survey drew responses from 295 companies with turnover ranging from 1 crore to 250000 crore, and from sectors such as textiles, steel, chemicals and fertilisers, oil and gas, auto and auto components, rubber and rubber products, food processing, electrical equipment and machinery, FMCG, pharmaceuticals, metal and metal products and business services.

The survey showed that companies felt worried about the performance of the economy and the corporate sector in the fiscal. The survey pointed out that the government could improve governance to ensure quick policy implementation and fast-track project clearances.

Also the business scenerio in India can look up if credit costs fall, problems with land acquisition are quickly resolved, tax reforms are announced and infrastructure spending is increased.

It mentioned that the current downturn in confidence can hurt companies and the economies. In the next two quarters of 2011-12 fiscal, 31% of the companies see their profits falling and 40% forecast flat earnings.

The corporate sector's growth plans were marred by a policy paralysis as government decision-making was marred by a series of corruption allegations that have disrupted parliament for weeks. FICCI's survey thus reflected apprehensions about business outlook.

Only 18% of the companies surveyed by FICCI were positive about raising selling prices in the near future and 22% expected a decline in prices.