Business bets on first-half upsurge
Chamber heat scalds small firms

 
 
BUSINESS BETS ON FIRST-HALF UPSURGE 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 28: 
Corporate India is betting on better times ahead. Awash with a surging confidence, it expects higher industrial output, benign inflation, buoyant bottomlines and an overwhelming feeling that the economy has just about everything needed to propel it to higher levels of growth.

Proof of this is available in a business confidence survey conducted by the Confederation of Indian Industry (CII). Used to gauge the mood of business in the short-term (six months), the survey has polled companies to see how they expect things to change between April and September 2000.

According to it, the presence of a stable government — a contrast from recent years in the past marked by political instability — has removed an important constraint to growth.

In all, 59 per cent of the respondents expect the general business conditions to improve in the next six months, 33 per cent see the present trend continuing while only 8 per cent remain pessimistic.

On inflation rate, nearly 57 per cent feel it will hover in the 5-10 per cent range, while 37 per cent expect it to move between 0-5 per cent.

An important feature is that companies now see an increase in the level of capital expenditure over the next few months — this has positive implications for a fast-recovering economy and a country always in need of more jobs. That the survey sees higher employment in the next six months should give advocates of reform a shot in the arm.

More jobs are expected to go hand in hand with a steady rise in industrial production. An overwhelming 95 per cent of the respondents predict an increase in the index of industrial production.

Now, the all-important bottomline. A large proportion of companies — nearly 71 per cent — feel profit margins will be thicker; nearly 5 per cent expect the same trends to continue while only 23 per cent foresee the lower declining. Retail sales are expected to swell. The survey says 85 per cent of the companies see them rising, 10 per cent expect the same trends to continue and only a minority of 5 per cent feel it will be lower.

However, the survey says there are other bottlenecks to contend with. It lists the high cost of funds and the lack of orders from the government and domestic customers as the key limiting factors. Other hurdles, like the poor state of infrastructure (power, roads, ports, telecom and railways), have always been known.

Export growth is expected to be higher -— both in terms of volume as well as value. In volume terms, 85 per cent of the respondents are optimistic about higher growth in the next six months.

Exporters see lower prices, stiffer competition in global markets, procedural bottlenecks, delays in clearances, problems in export credit finance, and unstable exchange rates as the major constraints.    


 
 
CHAMBER HEAT SCALDS SMALL FIRMS 
 
 
FROM OUR CORRESPONDENT
 
New Delhi, May 28: 
In this game of money power and one-upmanship between the chambers of trade and commerce (read CII and Ficci) the small players are left in the lurch.

Take the case of Assocham— once a venerable organisation— which is now losing its sheen by the day. Be it in terms of money or membership of corporate, Assocham stands alone like a step-child.

The chamber has long lost the capacity to lobby on its own, especially when Assocham bigwigs like the Singhanias and Thapars returned to Ficci.

Ficci is aware of this and hence doesn’t loose much if Assocham disassociates itself from the joint business council (JBC) which the two floated.

Assocham, which was known as the pucca saihib’s chamber, had kept complaining to desi bigwig Ficci that it was being sidelined in the JBCs. With Ficci now distanced from Assocham, it only makes sense for Assocham president, Shekhar Bajaj, to openly state, “CII is the numero uno among the three chambers.” More so because Assocham’s thought process is closest to that of CII.

Sources point out, if Assocham aims to have a close partnership with CII, it will have to remain a second fiddle. After all, CII has to serve its own interest first. Hence, the best way for Assocham to survive is to merge with Ficci, sources said. The JBCs between Ficci and Assocham should have assured Assocham of some mileage during Clinton’s visit.

But Ficci in an aggressive mood, decided to host Clinton with US India Business Council (USIBC), totally cold shouldering Assocham which had to piggyback on CII’s shoulders to get a glimpse of Clinton in Hyderabad. As secretary general of Assocham Jayant Bhuyian said, “we were mentioned only in the JBC logo.”

Within the chambers, the chamber constituents are also falling a prey to the bigger fish.

For instance, in the tussle between CII and Consumer Electronics and Television Manufacturers Association (Cetma) the fight is between those who manufacture colour televisions and those who manufacture colour picture tubes. According to Cetma, CII has sided with the cartel of domestic picture tube manufacturers like Samtel, JCT, and Hotline by not pressing for a lower import duty . And CII is accused of taking the cause of its active member Satish Kaura (Samtel owner).

However, if only the chamber is able to resolve the problem and import duty on colour picture tubes are brought down to 25 per cent as demanded by CTV manufacturers, consumers can hope for some relief.    

 

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