New Delhi , Dec. 30: India Inc is moderately upbeat about the performance of the economy in the second half of this fiscal.

A CII business confidence survey released today suggested that the economy would grow by around 9 per cent this fiscal, while companies are confident of exports picking up despite the hardening of the rupee. However, on an annualised basis, the business confidence index is at its lowest for three years.

Analysts said the economic outlook was bound to be affected by the surge in international crude oil prices and signs of a global slowdown.

“Expectations of a slowdown in the economy owing to the rising value of the rupee, high interest rates, surging global oil prices and a fallout of the US sub-prime crisis have dented the business confidence in the country, which has touched a five-year low,” they said.

At 66.3 points, the business confidence index for the second half was only 2.4 points higher than the first half.

However, it is 5.5 points down compared with the corresponding period last year.

The current situation index that compares current business conditions has witnessed a marginal increase of 0.2 points compared with the previous six months. When compared with the corresponding period of the previous year, the situations index is down 6.3 points.

The expectations index that reflects perceptions of the respondents vis-a-vis their company, sector and the Indian economy gained 3.5 points over the first half.

The expectations index for the second half when compared with the corresponding period a year ago is actually down by 5 points, reflecting lower growth expectations about the gross domestic product (GDP) and other aggregates during this fiscal.

The survey sees GDP growth for the year at around 9 per cent, though 22 per cent of the respondents expected growth to be in the range of 9–9.5 per cent, much above the government and RBI figures.

It said 87 per cent of the respondents plan to increase investments in the second half. Eighty-two per cent said the value of production was expected to increase in the next six months. In line with the increase in production, employment is expected to go up in the second half, with 51 per cent of the respondents suggesting so.

On exports, 67 per cent were confident about expansion. There was no change in the perception on procedural delays, a persistent problem for exporters.

The business confidence index, constructed as a weighted average of the current situation index and the expectations index, was higher among non-manufacturing firms (68.3) engaged in the provision of services compared with manufacturing firms (65.1).

Capacity utilisation across the board has increased, and 59 per cent of the respondents have revealed that capacity utilisation for October-March 2007-08 would be in the range of 75-100 per cent.

On inventory levels, 45 per cent of the respondents expected the inventory levels to increase.