New Delhi, April 27 (PTI): Economic conditions have deteriorated in the last six months with high interest rates, the appreciating rupee and the rising cost of raw materials playing the spoilsport, according to a survey by the Federation of Indian Chambers of Commerce and Industry (Ficci).

Fifty percent of the respondents to the survey have offered this view. Only 19 per cent of respondents had given a dismal view of the economy in the last Ficci survey.

The overall business confidence index has declined to 55.3 from 61.2 in the last survey.

“India Inc is deeply concerned over the evolving economic situation with growth slowing on one hand and inflation rising on the other. Companies have reported rising prices of industrial raw material as a serious concern impacting their business performance,” Ficci said.

The survey for the third quarter of fiscal 2007-08, conducted in March, received responses from 392 companies.

Industry expectations for the coming six months are also not optimistic. While 38 per cent believe that the current economic scenario will continue for the next six months, close to a third feel that things will turn worse. The expectations index has dropped to 55.7 from 62.2 in the last survey.

However, nearly 54 per cent of the participating firms said that they were likely to increase their investments in the coming six months. This figure is much higher compared with 33 per cent in the previous survey.

The survey found that many firms were left with no choice but to increase prices.

Stabilisation of the rupee to around Rs 40 to the dollar has helped some companies in their export business, but a majority 56 per cent feels that currency appreciation has dented their competitiveness.

The industry is split on the issue of the efficacy of the two per cent excise duty cut provided in 2008-09 budget. A majority is of the view that this will only help them maintain price stability for some more time.

Companies have reported that the rising interest rates have damaged growth and that the RBI should take steps to reverse the upward movement in interest costs.