FICCI: The worst is not over yet

09 June 2013 11:15 - Mark Maffia

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FICCI: The worst is not over yet


India's industry business confidence dropped for the second quarter in a row.   This is the result of a recent survey conducted by the FICCI.   Appeals had been made already to the Reserve Bank to cut lending rates when it will review its monetary policy soon.

 

Falling business confidence

Signs for a slowdown could already be seen by looking at the business confidence index, which had fallen to 57.4 in the first quarter of this year against 61.2 in the quarter before.   Further rate cut in the policy rates should be considered by the Central Bank, following the recent easing of wholesale price index numbers. This is what FICCI’s survey report suggests.

The CAD reached an all-time high of 6.7 % of the GDP in the fourth quarter 2012.


Lending rates

According to the report, 74 % of the people asked from industry believe that banks should not cut lending rates straight away, otherwise it could have a negative impact on industry investment plans. They also said that weak demand could be an obstacle for the overall business performance.

Some of those asked were concerned about the cost of credit.

200 companies had been asked for the survey.   Their turnover ranged from Rs 10 Lakh to Rs 1 lakh .


Improvement of economy not quite yet

Approximately 49 % expected an improvement of the general economy – the last survey’s result still said 52%. On June 17th the Reserve Bank will hold a first mid-quarter monetary policy review.   To cut policy rates could help to slow down inflation and to support growth.

 

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