Commenting on the result, Chandrajit Banerjee, Director General, CII, stated that We believe that 5% plus growth is still not out of reach. With a significant improvement expected in the growth of agriculture output in the current year, we hope to see an upswing in the sectors, which have traction from rural demand.
When asked to predict the timing of investment revival, 65% of the respondents said that they did not expect it before the second quarter of next fiscal. Political uncertainty was ranked as the highest risk factor affecting the business confidence of India Inc.
In an indication of easing current account deficit situation, 82% of the respondents felt that the value of rupee against US dollar was favorably affecting their exports.
Contrary to the expectation that low rupee will lead to increase in their import bill, 53% of the business leaders felt that their imports will remain unchanged during the second half of the year. Going forward, majority (53%) of the respondents expected the rupee to prevail below Rs 62 per US dollar by the end of the current fiscal.
Most of the respondents (37%) expected that their credit demand will remain unchanged during the second half of the current fiscal. Similarly, 50 of the business leaders did not see any perceptible change in their investment level during the second half of this year.
Commenting on the efficacy of the Cabinet Committee on Investment (CCI) in clearing large projects, 56% of the respondents did not feel it had the intended impact on the investments so far at the ground level.
This clearly implies that there is a need for strengthening policy intervention to revive investment demand, both by the Government as well as RBI. Among other critical measures, the Government should be focussing on stepping up its capital expenditure whereas RBI should be adopting a softer monetary stance, added Banerjee.
In the survey, 50% of the respondents expected their sales and exports to grow moderately during the second half of this fiscal. However, profit margin was expected to decline by majority of the respondents due to pressure from hardening of input prices.
Indicating that the economy is moving towards a situation of stagflation, majority of the respondents (42%) expected inflation to increase moderately in the second half of the year.