New Delhi, June 9 (IANS) Calling for further cuts in lending rates by banks, Indian industry has for the second stright quarter given a thumbs down to business confidence, according to a survey by the Federation of Indian Chambers of Commerce and Industry (FICCI).
The business confidence index dropped to 57.4 in the January-March quarter of 2013, as against 61.2 in the previous quarter.
According to the survey, 74 percent of the respondents said banks’ failure to cut lending rates immediately would have a serious to moderate impact on their future investment plans.
“The recent easing of Wholesale Price Index (WPI) numbers will give some more space to the central bank to consider further rate cut in the policy rates,” FICCI said here in a statement.
The survey respondents pointed out a marginal decline in interest rates for both working capital and terms loans over the past six months.
The Reserve Bank of India has cut the repo rate by 0.75 percent this year, while it is scheduled to announce its first mid-quarter monetary policy review on June 17.
Moreover, owing to the high current account deficit (CAD) coupled with weak market demand, as well as inadequate infrastructure investments, Indian business felt the worst is not yet over.
CAD touched a high of 6.7 percent of GDP in the quarter ended December 2012. In the survey, 28 percent of the participants said it was a bothering factor, up from 15 percent in the third quarter of the last fiscal.
The companies were also not upbeat about the sales prospects and profit margin performance over the next six months.
About 49 percent of respondents indicated they anticipate an improvement in the overall economic situation over the first two quarters of the current fiscal, as compared to 52 percent in the last survey round.
“The slight improvement in index of industrial production (IIP) and export numbers signal springing of green shoots and it will be crucial to keep nurturing them,” the survey said.
The survey felt that recent steps taken by the Cabinet Committee on Investments (CCI) to expedite the process of granting project clearances will unlock the huge investments in core sectors of the economy.