Pan-Asia survey: Sharp decline in Indian business confidence

Slow implementation of economic reform, a rising trend in non-performing assets and slowing credit growth has tempered business sentiment in India, according to a Thomson Reuters/INSEAD survey.

About 115 companies across Asia, including 19 from India, participated in the survey, on June 8-20. Thai firms are found to be the most positive in their outlook and optimism is on the rise in Singapore. Those from India have reported the sharpest fall in business confidence, the survey said.

Of 19 Indian respondents, 13 reported a positive outlook, compared with six neutral, with 15 booking increased sales and seven adding staff. They cited high interest rates, regulatory uncertainty and global economic uncertainty as risks. Among the sectors, property has seen the biggest fall in sentiment across Asia, the survey said.

The Thomson Reuters/INSEAD Asian Business Sentiment Index fell to 70 for the June quarter, from 71 in March and 74 in the same period last year. A reading over 50 indicates an overall positive view. Companies in India recorded the steepest fall in confidence, logging 84 from 97 in the previous quarter,

Progress in some areas is compensated by increasing risks in another," said INSEAD professor Antonio Fatas. "There is increasing concern for China and possibly for other emerging markets in the region as the US Federal Reserve starts raising rates. There is no great excitement to compensate for the risks of the region and the broader world economy."

The biggest gain was seen in Thailand as companies adjusted to the disruption of a May 2014 military coup, as well as two rate cuts which the central bank said had stabilised the economy. Chinese companies were the least optimistic for the first time in nine quarters. Business confidence shows a sharp dip in India raising concerns on whether the two bank rate cuts this calendar year are enough to revive a sluggish economy.