India Inc's business confidence drops to four-year low: report

Business confidence of India Inc for the July-September quarter dropped to the lowest level in four years amid several macro-economic challenges, Dun & Bradstreet (D&B) said in a report.

The Dun & Bradstreet Composite Business Optimism Index for the third quarter of 2013 stood at a 17-quarter low of 130.6, a decline of 4 per cent compared with the corresponding quarter a year earlier and a drop of 7.8 per cent from the second quarter.
     
Each of the six components in the index registered a decline from the second quarter, D&B said.

"Corporate confidence continues to wilt as the Indian economy remains saddled with several macro- economic challenges such as slowing industrial growth, elevated interest rates, weak FII inflows in June '13 and higher current account deficit," Dun & Bradstreet India president & chief executive officer Kaushal Sampat said.

He added that "much of the decline stemmed from the steep fall in optimism with regard to selling prices. Weak demand conditions are deterring firms from raising prices even as input costs remain high."

The prolonged economic uncertainty has been further compounded by the rupee's sharp slide.

The rupee last week sank to an all-time low of 60.76 against the dollar on heavy capital outflows and month-end demand from importers.

"While the government has again started initiating reform measures, a strong and urgent push from the government towards resolving supply-side issues and project implementation bottlenecks will send out the right signals and pull the economy out of its current slump," Mr Sampat said.

The Composite Business Optimism Index is calculated by assigning weights to each of its six parameters -- net sales, net profits, selling prices, new orders, inventories and employee levels.

The parameter weights are then applied to these ratios and the results aggregated to arrive at the index.