FICCI survey shows increased level of business sector confidence

The FICCI survey indicated that Indian business sector confidence has increased

New Delhi:

The latest business confidence survey from industry body FICCI shows an improvement in the level of confidence in the Indian business sector, with the overall business confidence index at 67.6 in the current cycle from 63.9 previously.

The survey finds an improvement in both current conditions and Indian business expectations in its latest round. The current state index improved to 66.1 from 62.6 in the last survey, while the expectation index rose to 68.4 from 64.5, the Federation of Chambers said. of Indian Commerce and Industry (FICCI) in a press release.

The survey – conducted in April 2022 – assesses respondents’ expectations for the period April to September 2022. Survey participants come from a wide range of industries.

The results reflect increased confidence among near-term industry members on certain operational metrics, including sales and investments. For example, the proportion of respondents anticipating better sales prospects in the short term was 62% in the current survey, up from over 50% in the previous survey.

As the latest survey results show, the demand situation is gradually improving. In the current survey round, 46% of respondents cited weak demand as a constraining factor, compared to 60% saying the same in the previous round and around 70% citing the same last year.

In addition, the investment outlook of participating companies also showed a noticeable improvement. Just over 50 percent of respondents expected higher investments compared to 40 percent who said the same in the previous round.

Improvements are also seen on the capacity utilization levels metric, with 45% of respondents indicating capacity utilization of more than 75% in the current survey. It was 30% in the previous round.

However, escalating commodity prices amid ongoing geopolitical tensions are weighing heavily on near-term earnings prospects. As a result, the percentage of participants citing higher profits in the next six months fell to 22% in the latest survey, from 30% of respondents in the previous round.

Geopolitical stress is causing considerable uncertainty. The conflict between Russia and Ukraine is impacting already high global commodity prices and has raised new concerns about the global recovery. Moreover, the cost of production has already increased over the past six months and the current conflict has further increased upward pressure on the prices of key industrial inputs.

In this survey, about 84% of participating companies said that higher raw material costs were a significant impediment to their business. The figure was 82% in the previous round.

Additionally, 48 percent of respondents said they had witnessed an increase in their cost of production by a margin greater than 10 percent. On the other hand, about 43 percent reported an increase of 5 to 10 percent, while 9 percent of respondents reported an increase in production costs of up to 5 percent.

Participants highlighted growing difficulties in sustaining growing cost pressures; the same is passed on to consumers while 77% of participants acknowledged the transfer of higher costs to consumers.

Among businesses passing some of their overall cost increase on to consumers, about 57 percent said they passed more than 10 percent of the cost increase on to end consumers (compared to 34 percent saying the same about two quarters ago), while 22% of respondents said they passed on more than 20% of the cost increase to their consumers.

However, around 43% of participants said they passed on less than 10% of the cost increase to their customers. The corresponding figure about two quarters ago was 66%.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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