Overall Confidence Index improves after seven quarters – FICCI Business Confidence Survey

New Delhi (31/01/2020): The latest round of FICCI’s Business Confidence Survey revealed an improvement in the optimism level of members of India Inc after seven quarters.

The Overall Business Confidence Index improved to 59.0 in the current round vis-à-vis an index value of 55.0 reported in the last survey. Improvement in both current conditions as well expectations index led to a better overall index value during the quarter.

However, a majority of respondents continued to cite weak demand situation as a worrying factor for their business. In the current survey, 76% participants reported weak demand conditions as a bothering factor as compared to 73% stating the same in the previous round. In fact, it was the third consecutive quarter when the proportion of respondents indicating subdued demand conditions stood above 70%. This has also manifested in deteriorating capacity utilization rates among members of India Inc.

The survey results allude to a moderate outlook for investments. Around 37% participants said that they foresee much higher to higher investments over coming six months vis-à-vis 38% stating likewise in the last survey.

Nonetheless, the companies seemed a bit more optimistic about their forecasts for sales and exports over next six months. In the current survey round, 43% of the surveyed companies said that they foresee much higher sales over next two quarters. The corresponding number in the previous round was 37%. Likewise, 34% respondents cited that they expect higher outbound shipments over next two quarters. The corresponding number in the previous round was 23%.

Favourable news on US-China trade negotiations and clearance to the BREXIT deal by EU Parliament are expected to have a positive bearing on economic sentiments. However, heightened geo-political tensions remain on fore and continue to pose as a risk factor to economic as well as export outlook.