India Inc has turned pretty optimistic. They expect better days six months from now, in terms of growth in sales and profitability. This despite fresh investment by the private sector still being far off thanks to continuous under-utilisation of capacities.
The latest round of ASSOCHAM Bizcon Survey points out that 65.5 per cent of the companies covered under the June series said they expected the macroeconomic parameters to look up by December 2016.
An equal percentage of the firms across different sectors said the performance at the industry level would also pick up with a consequence that there would be better sales realization and improvement in the profitability.
“Net-net, the latest Bizcon Survey tells us how things would look up in the next six months, mainly on the back of uptick in consumer demand helped by good monsoon. If consumer prices ease after the monsoon play out, we can even hope for the interest rates to moderate. Fortunately, crude oil prices continue to remain muted despite threats of a rebound earlier,”ASSOCHAM Secretary General D.S. Rawat said.
According to the survey, there was a shared optimism by 69 per cent of the respondents about better prospects even at the individual firms’ level.
Though fresh employment generation has so far remained a challenge, about 41 per cent of the corporate respondents expect pick up in the job creation. In terms of the wage costs scenario, majority of the industry respondents (65.5 per cent) feel that the wage costs will increase in future also.
The survey seems to reflect that in terms of the domestic investments there has been no change in the firm investment plans in the April to June 2016 quarter.
The survey also indicates that industry is not confident about own investment plan as 37.9 per cent of respondents believe that domestic investment may increase or there will be no change in the shorter horizon. “Thus there seems to be a continuing lack of appetite for new investment in the private sector,”it said.
The problem of high debt in certain key infrastructure and commodity sectors continues to stay there.
According to the survey results, the industry feels that the top five most important actions needed to accelerate economic activities are: Infrastructure development (considered to be the most important measure that shall help revive industrial growth), effective policy reforms, reducing cost of borrowing, clearance of stalled projects, and inflation stability.