India Inc sees recovery signs, says days of high growth around the corner

1 Jun 2009, ET Bureau

NEW DELHI: India Inc feels the economy has started recuperating and can move to a higher growth trajectory in the next few months, as per a survey by industry body FICCI. Half of the companies that took part in the survey posted better growth in the fourth quarter of 2008-09 compared with the previous two quarters.

The survey, which took into account views of 300 companies across sectors such as banking, auto, pharmaceuticals, steel and FMCG, indicated that corporate India is fairly optimistic about performance in the near future. Besides, the survey also demonstrated a major jump in the overall business confidence of more than half of the respondents. The chamber, however, refused to name the companies that participated in the survey.

“The survey demonstrates that domestic companies and foreign financial institutions are beginning to feel a sense of confidence,” Ficci secretary general Amit Mitra said. The chamber said the growing confidence is the first step towards the possibility of returning to the 9% growth trajectory, provided the focus is back on reforms.

Around 57% of the participants felt that overall economic condition was substantially better in the fourth quarter of the last fiscal compared with the first two quarters of the same year. But at the same time, the companies also indicated that weak demand and availability of credit persist to be areas of concern.

Close to half of the respondents said the high cost of credit was bothering them. The respondents reported that they were paying interest rate of 12% and indicated that it should be slashed by 3-4%. Commenting on the future performance level, two-third of the respondents said they foresee an improvement over the next two quarters.

The survey also threw light on some major problems areas of corporate India. Around 74% of the respondents said that weak demand was acting as a constraint to growth. The steps taken by RBI and government over the past two quarters have been instrumental in giving a boost to demand but there was scope for further stimulus measures to bring the economy back on track.