New Delhi, May 16: India Inc’s business confidence has been pooped: It’s down four points at 71.6 from 75.6 in the third quarter of 2004-05.

The index stood at 66.7 in the first quarter and 69.2 in the second quarter of 2004-05.

The crumbling of business sentiment is being attributed to a confluence of factors: The introduction of the fringe benefit tax, differential application of value-added tax (VAT), rising input prices and some concern over demand conditions.

Still, corporate India remains upbeat about export prospects, investments and accretion to the workforce.

The fourth business confidence survey (BCS) 2004-05 released by the Federation of Indian Chambers of Commerce and Industry (Ficci) here today says the respondents have largely welcomed the switchover to the VAT regime, but have expressed misgivings over the lack of uniformity in rates of select commodities across states and the continuation of central sales tax.

The industry, however, hopes that the uncertainty will disappear once the empowered committee ensures harmonisation of VAT.

A close look at the findings of all the four quarters, however, suggests a distinct feeling of buoyancy in the industry in the third quarter across all parameters, with readings slipping in the fourth quarter.

The optimism observed in the first, second and fourth quarters show a “continuous trend in the overall well-being and secularity on responses," said Ficci secretary-general Amit Mitra.

Explaining the over-optimistic outlook in the third quarter, Ficci officials said the responses by the industry did not factor in those on issues like VAT and the fringe benefit tax as well as increase in global crude prices.

According to the survey, a majority of 67 per cent of the respondents feel that the current overall economic conditions are ‘moderately to substantially' better compared with the last six months.

Another 69 per cent of the respondents expect overall economic conditions to be ‘moderately to substantially better’ in the coming six months. India Inc's outlook for industry performance in the near future is positive with 70 per cent respondents looking forward to much better performance of their sectors in the coming six months.