Ficci Survey Dashes Hopes Of Early Recovery

In a survey of 342 corporates conducted by the Federation of Indian Chambers of Commerce & Industry (Ficci), 68 per cent have said that the economic slowdown would continue for at least six more months to a year.

This is in contrast to the optimism expressed by finance minister Yashwant Sinha, who expects a turnaround by December.

The survey reflects corporate sentiment based on the economic scenario up to July 20, 1998.

Lack of effective demand has been cited as the main reason for the slowdown. Infrastructure bottlenecks, low public expenditure, high interest rate and unavailability of credit are the other reasons. A December 1997 survey had ranked infrastructure bottlenecks as the major cause of slowdown followed by demand slump.

The Asian currency crisis and slowdown in international trade have also prevented a quick revival, with 63 per cent of the respondents saying that the Asian meltdown had left imprints on the economy while 58 per cent felt the shrinkage in world trade also had a role to play.

Dumping by several countries has been cited by 58 per cent of the respondents as one of the major factors affecting the industry while tariff and non-tariff barriers have also been blamed for the downtrend.

However, 65 per cent of the respondents said economic sanctions imposed by the United States and other countries after the nuclear tests had no effect on their companies.

On inflation, 57 per cent of the 342 respondents expected it to be between six and eight per cent for the next six months, while only seven per cent expected it to cross 10 per cent.