India slips from top to 8th spot in business optimism

The list was topped by UAE and Philippines, where 90% of businesses said they are optimistic about growth

Appointment of Raghuram Rajan as RBI governor seems to have steadied the economy and provided the much-needed confidence to Indian businesses, the report said

India has slipped to eighth rank from the top spot in terms of business optimism, with 69 per cent of the companies polled having a positive outlook on the economy and growth of operations in 2014, says a survey.

India ranked eighth in the list, topped by United Arab Emirates and Philippines, where 90 per cent of businesses said they were optimistic about growth and the economy, followed by Peru at 84 per cent, according to Grant Thornton's International Business Report (IBR).

“India has slipped from topping the optimism charts in the IBR for five consecutive years to number eight on the global tables,” Grant Thornton India LLP National Managing Partner Vishesh Chandiok said.

IBR is a survey of both listed and privately-held businesses. The data were drawn from interviews with 3,500 senior executives across industry sectors and was conducted between November and December 2013.

With strong sentiment for change in the recent state elections and decisive actions by the Reserve Bank of India/government in recent months, it's easy to see how medium to large businesses in India are more optimistic about the outlook for the economy in the coming months, Chandiok added.

“Whilst there is risk in expecting too much too soon from the current or any new regime, I certainly expect a dramatic turn in sentiment towards positivity from Q2 of financial year 2014-15," he said.

Moreover, the appointment of Raghuram Rajan as the governor of the Reserve Bank of India seems to have steadied the economy and provided the much-needed confidence to Indian businesses, the report said.

According to the report, 90 per cent of Indian businesses believe their revenues would rise in 2014, while 76 per cent are most optimistic for increasing profitability this year. Around 35 per cent of businesses are also hoping to witness a jump in exports.

Research and Development (R&D) initiatives are also likely to get a boost this year with 46 per cent of businesses betting big on R&D. About 65 per cent  foresee a rise in employment in 2014.

“Despite optimism on several fronts, Indian businesses still feel the pinch with respect to low availability of finance," the report said, adding that 52 per cent of companies believe shortage of finance is likely to hurt their business and derail their growth plans in 2014.

Other constraining factors include rising energy costs, regulations/red tape and lack of skilled workers.