Corporate India's confidence level has shown signs of improvement in the March quarter even as the domestic economy is witnessing high inflation and a likely slump in growth rate, says a survey.
According to the NCAER MasterCard Worldwide Index of Business Confidence, the confidence of India Inc increased by 7.7% over the previous quarter to 134.9 points in the March quarter from 125.2 points in January 2012.
Confidence level in doing business rose for the first time since January 2011, irrespective of the fact that there is a global slump and high inflation rates.
The change in business sentiments comes on the back of a number of developments that have taken place on both domestic and global front during the last quarter of FY12, the survey said.
While moderation in economic growth rates persisted, inflation rate also moderated and the foodgrain harvest in 2011-12 has been at a record level, the study said.
"The index shows some significant changes in the economy during the quarter ending March 2012. After a dip in the year 2011, the index showed positive business sentiments during this time period.
"In light of the current challenging economic environment, the next quarter index will be worth watching," T V Seshadri, Division President, South Asia and Country President India said.
"It's encouraging to see how the economy is recovering from the slump. The investors are regaining confidence and there is a positive outlook which has impacted this quarters result," NCAER Senior Research Counselor Shashanka Bhide said.
The survey measures business confidence on four indicators -- overall economic conditions, financial position of firms, investment climate and level of current capacity utilisation.
Overall, the survey reflects improved business sentiments in all regions except South where although the present situation has improved, firms are still not sure about changes in the short run future, according to survey that was conducted in March 2012 and received 528 responses.
The survey also has a special section on expectations and evaluation of Union Budget 2012-13, which suggested that the business sector was expecting measures to boost investment and demand more directly and these may not have been realised.
Meanwhile, the ratings of political management of the economic issues have declined compared to the previous quarter.
Region-wise results suggest that Political Confidence Index (PCI) declined for two regions North & South and improved for the other two regions East & West over the previous round.