New Delhi, Nov. 2: The Confederation of Indian Industry (CII) confidence index has gone up by 3.3 points to touch the 64.9 mark.
According to CII, the increase in the index reflects that good monsoon, strong macro-indicators, favourable corporate results and the resulting boom in the stock markets have together led to an increase in positive sentiments across the country.
This is the second time that this biannual index has been constructed for forecasting the sentiment of the industry and the state of the economy.
The confidence index is part of the 60th business outlook survey covering all industrial sectors across regions. A panel of 215 companies from the private and public sectors was taken up in the survey.
The positive outlook comes close on the heels of the RBI forecast of a 6.5 per cent growth in GDP and credit rating agency Crisil’s prediction of a 7.1 per cent growth rate.
The CII index is made up of a weighted average of the current situation index and the expectations index. Each is based on three questions on the performance of the economy, the activity sector and a particular company. The survey relates to the actual performance of industry in April-September this year and forecast for October to March next year.
In the current fiscal, a majority of 67 per cent of the respondents have stated that Gross domestic product (GDP) growth would be greater than 6 per cent. Twenty one per cent felt that economic growth would be between 5.5-6 per cent. Around 8 per cent said the economy would grow at about 5 per cent. Only 3 per cent felt that growth would be less than 5 per cent.
The survey revealed that 69.3 per cent are looking at fresh capital investments in the existing business unit. In yet another positive note, 97.1 per cent of the respondents envisaged a growth in production for their company in 2003-04.
As far as value of production is concerned, 72.3 per cent of the respondents foresee an increase in the value of production in the next six months. A 21.2 per cent are expecting no change and only 6.6 per cent are expecting a decline.
In the next six months, 45.3 per cent of the respondents expect an increase in profit margins and 18.2 per cent expect a decrease in their profit margins.
Lack of orders and slow implementation of domestic reforms have been identified as the most limiting factors in this survey. Power has once again emerged as the most vexing problem for industry in terms of infrastructure bottlenecks.
PTI adds: The government may be able to check fiscal deficit within 5.4 per cent of GDP against 5.6 per cent budgeted for 2003-04, backed by a robust 7.13 per cent economic growth, according to National Council for Applied Economic Research (NCAER).
“Government finances may improve slightly in terms of the GDP ratio,” an NCAER report said. The economic think-tank expects the fiscal deficit to be at Rs 1,45,466 crore or 5.4 per cent of GDP. “On an average, fiscal deficit is expected to grow 11.32 per cent in 2003-08. But, due to higher GDP growth, average fiscal deficit may decline to 5.3 per cent in 2003-08 compared with 5.9 per cent in 2002-03,” it said.