The government has been accused of ushering the economy into a period of jobless growth. A business chamber survey has painted a gloomier picture — one of “jobless de-growth”.
“Net responses with regard to prospect of employment opportunities have turned negative — the first time since the 2008-09 crisis. Thus, the current economic slowdown coupled with a negative growth in employment prospects may force the economy into jobless de-growth,” said a Federation of Indian Chambers of Commerce and Industry (Ficci) statement on the survey.
The survey found that employment opportunities have turned worse for the first time since the US financial services icon Lehman Brothers collapsed.
The results of the survey by Ficci came just two days after the GDP numbers for the first quarter of this fiscal surprised analysts. The economy grew by 5.5 per cent in the first quarter of this fiscal against 5.3 per cent in the previous quarter.
Most analysts had predicted the economy to perform worse sequentially. The survey said India Inc’s confidence has taken a beating for the first quarter of this fiscal.
The Business Confidence Index fell to a three-year low of 51.8 points for the quarter, way down from 60.3 in the previous quarter.
In 2010-11, the index was in the range of 60 to 73 points. In 2011-12, it generally hovered over 51 points but rose significantly to over 60 points, may be due to expectations from the Budget, Ficci economic affairs and research division director Soumya Kanti Ghosh said.
The survey was conducted between July and August 2012, and hence was subsequent to the first quarter of this fiscal, for which GDP numbers were released a couple of days ago.
Ghosh said the slightly better GDP numbers do not alter the findings of the survey any significantly.
As much as half of the respondents said GDP growth could be less than 5.5 per cent for the current fiscal. As many as 12 per cent pegged economic growth to be over six per cent and 38 per cent between 5.5 and six per cent. But the economy has grown by 5.5 per cent in the first quarter of this fiscal.
The survey showed that the respondents, 150 from various segments of Indian industry, were not upbeat about performance and lacked optimism about future performance at economy, industry and firm levels.
The findings showed that weak demand continues to be a concern for members of corporate India. Nearly 73 per cent of companies reported weak demand to be a constraining factor. The corresponding figure in the last survey was 57 per cent, and a year ago it was 56 per cent.
GDP figures showed that demand in the economy did not show any turnaround in the first quarter of this fiscal. Private final consumption expenditure rose by just 3.97 per cent in the quarter against 6.12 per cent in the previous quarter and 14.86 per cent in April-June 2011-12.
A significant proportion of participants in the survey indicated cost of credit to be a constraint.
Responses indicated that the industry outlook for the next six months was gloomy on the back of low investment, exports, profits and sales.
There was a considerable decline in the number of respondents who said investments would be higher over the next six months. As many as 42 per cent of the respondents said investments would remain same in the next six months as against 48 per cent in the last quarter survey. As much as 25 per cent of the respondents said investments would go down in the next six months.
Fixed investment expanded by just 0.65 per cent in the first quarter of this fiscal against 3.6 per cent in the previous quarter and a high of 14.88 per cent in April-June 2011-12, according to official data.