India's business confidence at 3-year high

Confidence of India Inc. in the economy has risen to the 14-quarter high ahead of the first budget of Prime Minister Narendra Modi-led government, according to a survey conducted by industry chambers FICCI.

"A clear mandate in elections, followed by a slew of announcements undertaken by the government has lifted the spirits of industry members," the Federation of Indian Chambers of Commerce and Industry said in a survey report.

"However, going ahead, it will be imperative to back these announcements with speedy and timely action," it said.

FICCI's latest Business Confidence Survey reflects signs of rebound in the economy.

The Overall Business Confidence Index inched up eight notches in the current survey vis-a-vis the previous round.

This is the third consecutive improvement in the business confidence in the country.

The survey report comes days ahead of the first union budget of the Modi government to be presented July 10.

Respondents are clearly more upbeat about the near term prospects and this is true for expected performance at all the three levels - economy, industry and firm level, the survey report said.

In fact, a whopping majority of 93 percent participants said that they expect the overall economic situation to be "moderately to substantially better" in the coming six months.

The investor sentiment which had taken a sharp hit in the past also seems to be recuperating.

According to the current survey results, a plunge was noted in the percentage of participating companies anticipating investments to decline in near term.

About 6 percent of the respondents indicated lower investments over the next two quarters. The corresponding figure was 20 percent last time. Also, 40 percent companies said that they foresee higher investments over the next two quarters, vis-à-vis 24 percent stating likewise in the last round.

Outlook of the participating companies with regard to employment and exports also improved.

However, low demands remain a key constraint. Nearly 74 percent of the surveyed companies said demands remained weak. Majority of them expect it to improve over the next six months.