India Inc's biz confidence climbed in June quarter: Report

Seventh Pay panel recommendations, favourable monsoon, proactive reforms agenda drive sentiment

Indian industry remained upbeat about the business environment in the June quarter on account of wage hike as recommended by the Seventh Pay panel, progress of a favourable monsoon and proactive reforms agenda of the government, says a report.

The CII Business Confidence Index (BCI) has improved to 57.2 in April-June 2016, from 54.1 in the previous quarter.

"A rise in business expectations sends an early signal that industry is anticipating an upturn in demand propelled by factors such as implementation of the Seventh Pay Commission, progress of a favourable monsoon and pro-active reforms agenda of the government," the CII report based on a survey said.

It said optimism in business sentiment this quarter has been backed by strong expectations of economic growth for 2016-17. More than 60 per cent of the total 200 firms that participated in the exercise are expecting the real GDP growth to range between 7-8 per cent this financial year.

Business conditions are also expected to improve as 61 per cent of the firms expect an increase in sales in April-June 2016 compared with only 42 per cent in January-March.

"Much of the recovery in business conditions is expected to be domestically driven as a majority of the firms expect to maintain status quo on their export orders in April-June 2016," it added.

Further, it said profit expectations have improved in April-June, with nearly half of the firms anticipating an increase in after-tax profit in the said quarter.

According to the report, a majority have put their investment plans on hold in the quarter under review, despite expectations of improvement in sales and new orders in the period in question.

"A large proportion of the firms (40 per cent) feels that a turnaround in the global economy is required to jumpstart the private investment cycle," it said.

"Firms, when asked to rank their concerns, rated low domestic demand, fragile global economic recovery and lack of political consensus on economic reforms as their top three concerns.