India Inc optimistic about economic growth in 2015: report

But 70% of firms cite regulations as a constraint to growth

Indian companies are optimistic about the country’s economy in 2015, according to the Grant Thornton International Business Report (IBR) 2015. As many as 98 per cent of the respondents in the survey said they were pleased with the policies of the government. This show of confidence is the highest in the survey (global average is 35 per cent).

Optimism among Indian businesses continued to improve in 2014. However, 70 per cent of Indian businesses have cited unfriendly regulations or red tape as a constraint for growth, also highest in the  survey, signalling the new government to ease regulatory shackles and make decision making faster.

“At the global stage, a recent spate of uncertainty has been weighing on growth prospects for the year ahead. This is mainly due to the fall in oil prices, tensions in Ukraine and concerns around the pace of the slowdown in China. The confidence of business leaders, especially in the world's largest three economies, has slipped as we enter 2015,” said the report by the global consultancy.

According to the IBR, global business optimism for 2014 stood at an average of 41 per cent, compared to 28 per cent in 2013 and just 12 per cent in 2012. However, global optimism dropped from 43 per cent to 35 per cent in the fourth quarter, driven by steep falls in the US (down 10 percentage points to 59 per cent), China (down 30 percentage points to 25 per cent) and Japan (down 12 percentage points to -12 per cent).

Ed Nusbaum, global chief executive officer of Grant Thornton, said: “Business confidence is a key indicator of future economic performance. The large rise in global optimism in 2014 came as a pleasant surprise after a couple of tough years but the dip in the last three months suggests that businesses around the globe see trouble on the horizon in 2015.”

Nusbaum added that the prevailing uncertainty was making life tough for businesses, forcing them to delay decisions over investment in the future growth of their operations. “Given the turbulent state of global markets, this is understandable. They remain positive about their expansion prospects but certainly less so than three months ago,” he noted.

The study showed that Indian businesses are expecting an increase in revenues (94 per cent) and profits (89 per cent) in the next 12 months. 

Globally, however, both revenue growth - down 13pp (from 56 per cent to 43 per cent) - and profit growth - down 11pp (from 43 per cent to 32 per cent) - prospects have fallen. In both China (37 per cent) and the US (35, per cent), revenue growth expectations dropped 33pp over the quarter.