Business Confidence Index for Oct '06-Mar '07 up

New Delhi, Jan 21: Following an impressive performance in the past six months and perceptions of higher growth and capacity expansion, there is an increase in confidence among the country's businesses.

The business confidence index revealed by CII's 66th business outlook survey at 71.8 was higher for the period October-March 2006-07 with an increase of 2.5 points compared to the previous period of April-September 2006-07.

The index constructed as a weighted average of the Current Situation Index (CSI) and the Expectations Index (EI), was higher among the non-manufacturing firms engaged in provision of services as compared to manufacturing firms.

The CSI that compares current business conditions with the previous six months has witnessed a significant increase of 3.4 points for the period April-March 2006-07. This reflects that a larger number of responding firms have appraised better current conditions for the growth of the overall economy, the sector in which they operate and their individual company growth performance to be better compared to the previous six months.

The EI that reflects the perceptions of Indian industry with regards to performance of their company, sector and the Indian economy for the next six months is up by two points for the period October-March 2006-07.

About 32 per cent of the respondents of the survey expected the country's GDP growth for the year 2006-07 to be in range of 8.5 per cent to nine per cent.

Nearly 22 per cent felt that growth exceeding nine per cent is also not a distant possibility, reflecting a significant increase in business confidence when compared to GDP growth expectations revealed six months ago.

The survey revealed that 85 per cent of the respondents plan to increase investments during October-March 2006-07. Capacity utilisation across the board has increased and 58 per cent of the respondents have expressed confidence that capacity utilisation for October-March 2006-07 will be in the range of 75-100 per cent.

Another 24 per cent of the respondents expressed confidence that the capacity utilisation will exceed 100 per cent.

The value of production is also expected to increase in the next six months. This was revealed by 82 per cent of the respondents. For 79 per cent of the respondents production increased in the first half of 2006-07. Further increase in production is likely because of expected increase in new orders.

The second half of 2006-07 is expected to be better in terms of increase in new orders, as 80 per cent of the respondents expected new orders to increase in the next six months, while about 78 per cent of the respondents revealed that new orders had increased in the first half of 2006-07.

Employment is also expected to increase in the second half of this financial year. This was expressed by 56 per cent of the respondents, who expected employment to increase during October-March 2006-07, while 50 per cent of them said that employment had increased during the period April-September 2006-07.

On exports, 73 per cent of the respondents expressed confidence in exports expansion for the period October-March 2006-07. During April-March period of 2006, about 67 per cent of the respondents said exports had increased.

However, 67 per cent respondents felt that the procedural delays have not reduced. ''This has been a long-standing hurdle for exporters, which raises transactions costs and needs to be addressed urgently,'' they said.

Also 73 per cent of the respondents don't see any change to be happening on procedural delays for the period of October-March 2006-07.

UNI