FICCI’s latest business confidence survey showed an improving level of optimism among Indian companies. The overall Business Confidence Index stood at 67.6 in the current round, compared to 63.9 in the previous survey round, supported by an improvement in both current conditions and expectations.
The FICCI report titled ‘Business Confidence Survey April 2022’ said that better optimism among industry members was reflected in the near-term outlook on certain operating parameters including sales and investments. “The proportion of respondents expecting better sales prospects in the near term stood at 62 per cent in the current survey round. This was higher than the 50 per cent respondents in the previous round.”
It added that the demand situation is showing an improvement and this has also been reflected in the latest survey results. According to the survey report, in the current survey round, 46 per cent of the participants cited weak demand as a constraint factor, with 60 per cent stating similar in the previous round and nearly 70 per cent of the previous year.
“The investment outlook of the participating companies has also reported a marked improvement. A little over 50 per cent of the respondents had expected higher investment compared to 40 per cent stating the same in the previous round. The level of capacity utilization is also gaining momentum. In the current round of the survey, 45 per cent of the respondents indicated a capacity utilization rate of over 75 per cent, compared to 30 per cent in the previous round.
However, the report added that the rise in raw material prices amid the current geopolitical tensions is weighing heavily on the near-term outlook for profitability and exports. The percentage of participants citing higher gains over the next six months dropped to 22 percent in the latest survey from 30 percent of respondents citing similar gains in the previous round.
The survey received responses from around 165 companies with turnover ranging from Rs 1 crore to Rs 11,000 crore and belonging to different sectors. The report said the survey assesses the expectations of the respondents for the period from April to September 2022.
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. About 43 per cent of the participants said that their cost of production increased between 5 per cent and 10 per cent, while the remaining 9 per cent saw an increase in cost of production by up to 5 per cent.
Participants also indicated that it was becoming increasingly difficult for them to tolerate rising cost pressures, and the same was being passed on to consumers – a majority 77 percent of participants indicated the passing of higher costs to consumers.
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