Although, the interim budget is expected to provide some relief to a slowing economy, the rising cost of credit will remain a top concern for the Indian industry, a view from a poll of CEOs conducted by Confederation of Indian Industry (CII) at its National Council meeting after presentation of the budget showed.
Around 38% of CEOs, who were surveyed, listed high interest costs as their major concern going forward. This was in contrast to the results of the previous such poll when political uncertainty was ranked as the highest worrying factor for industry.
In a reflection of the improving demand situation in the domestic and global economy, albeit mildly, a majority of the respondents expected their gross sales, exports, capacity utilisation and net profit to improve moderately in the fourth quarter of the current fiscal from the previous quarter.
Over 71 respondents expected moderate increase in gross sales and 48% in exports, 48% in capacity utilisation, 38% in investment and 48% in net profit.
The mild improvement in business conditions has so far, however, failed to raise credit demand as 57% of the respondents expected no change in sentiment, indicating that new investment activities have not yet started picking up.
Majority of the respondents also said that they foresee investment revival only from the third quarter of next fiscal, while new investment decisions are apparently awaiting the formation of the new government at the centre.
Interestingly, political uncertainty did not emerge as the topmost concern of the CEOs. When asked to rank the top risk factors to the business outlook in the current quarter, only 19% mentioned political uncertainty in comparison to 38% who rated rising borrowings cost as the topmost concern.