New Delhi, Dec. 29 (PTI): The CII Business Confidence Index rose sharply to 54.9 during the October-December period of 2013-14 from 45.7 in the previous quarter, indicating economic revival.
“With positive signals emanating from the global economy, which finds a resonance in our improved export performance and decline in the current account deficit, we believe the slowdown in the domestic economy may have bottomed out in the second quarter and the trend could reverse henceforth,” CII director-general Chandrajit Banerjee said.
The pick-up in business confidence comes as a relief to the economy, which has been braving the onslaught of the slowdown for the last several quarters and awaiting the return of growth. However, it also strikes a note of caution saying that the downside risks to growth have still not abated and supply-side bottlenecks continue to pose a problem.
It said that despite the likelihood that subsidies would cross the budgeted target by a wide margin, and the impending general elections pose upside risks to government expenditure, as many as 53 per cent of the survey respondents expected fiscal deficit to remain below the 5-per-cent mark, broadly in line with the government’s target.
“We need to be careful about the upward risk to fiscal deficit amid the scenario of weak economic growth translating into sluggish tax collection and growing chances of the divestment proceeds falling well short of the target,” Banerjee cautioned.
The top five concerns in order of severity to most firms which participated in the survey were: domestic economic and political instability, slackening consumer demand, high level of corruption, persistent high inflation and risk from exchange rate volatility.