Interim budget will boost demand: Industry

The interim budget presented by Finance Minister P. Chidambaram is expected to provide some relief in a situation where overall demand continues to remain subdued, the Confederation of Indian Industry (CII) has said.

"However, rising cost of credit is a top concern for Indian industry," CII said in a statement here Sunday after a poll of CEOs conducted at its National Council meeting, after presentation of the interim budget last week.

An overwhelming 74 percent of the respondents said the interim budget would help increase overall demand moderately in the next six months, while 21 percent believed that budget announcements would not lead to any change.

Thirty-eight percent of CEOs listed high interest costs as their major concern going forward.

Commenting on the survey results, CII director general Chandrajit Banerjee said: "The increase in demand expected from announcements of the interim budget would ensure that growth recovery is not compromised during the transition period of the government."

"Without sacrificing the objective of fiscal consolidation, the finance minister's attempt to provide a fillip to manufacturing sector by altering excise duties in a few critical sectors is commendable," he added.

A majority of the respondents expected their gross sales, exports, capacity utilization and net profit to improve moderately in the fourth quarter of the current fiscal from the previous quarter, the statement said.

While 57 percent of the respondents expected no change towards increase of credit demand, 42 percent said they foresee investment revival only from the third quarter of next fiscal.

Political uncertainty did not emerge as the topmost concern of the CEOs, in contrast to the results of the previous such poll when it was ranked as the highest source of worry for industry.