New Delhi, Jun 29: India Inc looks at the future with nervous optimism with majority of companies feeling that conditions in the last six months have worsened as compared to the period before, a FICCI Business Confidence survey here said. Industry is keeping its fingers crossed for a recovery in the medium term. This is on account of runaway inflation resulting in rising input costs which has affected the absorptive capacity of the companies.
The survey brings out that any further hike in interest rates would make the economic environment extremely difficult and perhaps insurmountable. The survey, which drew responses from 413 companies having turnover ranging from Rs one crore to Rs 1,39,000 crore, notes the economic trends may have reached their worst levels and from now onwards one can expect some corrections.
Performance at the economy, industry and at the firm level has further weakened, says the survey, adding that the growth momentum is losing steam.
According to the survey, the current conditions index is at its lowest because of moderation in growth, rise in inflation and rise in input cost.
However, the expectations index has shown a marginal rise and the industry sees recovery in the medium term.
The overall business confidence index, therefore, has not seen any lateral movement and maintained its level as seen in the previous survey.
The survey also shows that the pressure on industry due to rising interest and input costs is insurmountable and thus companies are being forced to revise prices upwards. Hence, manufacturing inflation will go up in the months ahead and it would be a persistent trend throughout this year.
The FICCI, in the light of these findings, suggests that the authorities take some measures to bolster the change in perception amongst members of India Inc. If the industry is saddled with further interest rate hikes, then the present phase of 'nervous optimism' may not last long.