New Delhi: The business confidence of India Inc. for the October-December quarter has fallen on concerns such as inflation and high interest rates, a survey has revealed.
The study by the Confederation of Indian Industry (CII) says the industry lobby's business confidence index for October-December 2010 fell by 1.4 points to 66.2 as compared to an increase of 1.5 points during April-September.
The index reflects the expectation of Indian industry about the performance of companies, sectors and the economy.
The survey found inflationary conditions, slackening consumer demand, cost and availability of labour and high interest rates as the top concerns.
"There has been some moderation in business confidence reflecting concerns about the outlook for the current quarter," said Chandrajit Banerjee, CII director general.
The survey revealed that over 59 per cent of the respondents expect the gross domestic product growth would be eight per cent, while 39 per cent expect it to be in the range of 8 to 8.5 per cent in 2010-11.
On inflation, 70 per cent of the respondents expect average inflation for 2010-11 to be above six per cent, of which 38 percent expect it to be higher than eight per cent.
The survey also looked into prospects of investment, capacity utilisation, production, employment and exports as elements that build up the business confidence.
It showed that 63 per cent of the respondents expect an increase in their spending on capacity expansion during October-December 2010 as compared to the previous quarter.
Further, 72 per cent expect capacity utilisation to exceed 75 per cent in the quarter ending December 2010 as compared to 55 per cent of respondents whose capacity utilisation actually exceeded 75 per cent in the previous quarter.
Seventy seven per cent of the respondents expect their sales to rise while 67 per cent of the respondents foresee an increase in production in October-December 2010 as compared to the previous quarter.
Over 59 per cent of the respondents expect raw material prices to go up in the coming quarter.
The survey also revealed that 80 per cent of the respondents do no expect availability of credit to increase, while 94 per cent feel that the cost of credit will not fall in October-December 2010.
On exports, over 56 per cent expect that the export volumes will increase.