India Inc expects an economic recovery – PHDCCI survey

Shimla: Though vary of the slow down, India Inc in a PHD Chamber survey have cautiously expressed optimism of a substantial economic recovery in the current financial year.

Up from the lows, in a survey sample size of 240 units carried out in a month, 48 percent have are expressed confidence of a economic recovery in the first half of 2009-10, said a PHDCCI spokesman. About 65 percent respondents expect their businesses to grow during the year, he added.

Drying up of export orders was a major concern for the units surveyed as order books of exporting units were in bad shape. Around 66% of the results polled showed a significant decline in overseas sales in the last six months owing to recessionary conditions and slowdown in demand in countries such as USA, Europe, Japan, Middle East, Latin America and Russia and South East Asian countries.

What was significantly hurting several companies was lower prices being charged by competitor countries such as China, ASEAN and even some South Asian countries. Besides, the problem of delayed payments and requests for discounts by the foreign buyers are eroding the profit margin of companies and also negating the price advantage accruing to the company on account of rupee depreciation.

Almost all respondents felt that the stimulus package announced by the Government would be beneficial for industry. Most felt that it would take at least 3 to 6 months for the policy package to make a visible impact.

To revive business sentiment, the government needed to ensure credit availability to industry, particularly for the SME sector at cost effective rates as small scale units are not getting the benefit of the monetary measures taken by the government and are facing shortage of working.

Capital loans in international currencies like dollar should also be made available to exporting units.  Long term buyer’s loan facilities for project financing should be provided in line with Exim Bank of USA and Canada. RBI should allow delayed payments up to 270 days.

CRB Lalit, PHD advisor cautioned that the government should augment demand in the domestic market to compensate for the shortfall in export orders from USA and Europe. To stimulate demand for rural housing, the people should be provided easy access to loans, he said.

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