Diwali to cheer you next year: Assocham

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After failing to make for a happy Diwali this year, a survey shows economy will definetely add lustre. (Reuters) After failing to make for a happy Diwali this year, a survey shows economy will definetely add lustre. (Reuters)
SummaryAfter failing to make for a happy Diwali this year, a survey shows economy will definetely add lustre.

A majority of corporate honchos feel that reviving India's overall economic growth to seven per cent will be feasible in the next fiscal, a survey by industry body Assocham said today.

According to Assocham's confidence Index, "After a subdued Diwali this financial year, India Inc will certainly see a sparkle in the festive season of 2013-14 on the back of manufacturing and exports returning to growth".

The survey, which covered 171 Chief Executive Officers (CEOs), under the confidence from different sectors feel that it would take at least another 6 months for several segments of the industry to "repair" and "deleverage" their balance sheets before they march further on the growth path, it added.

The confidence index was measured in the two weeks ending November 7 across different verticals, it said.

Around 61 per cent of the CEOs felt that reviving overall economic growth to 7 per cent is feasible in the next fiscal.

They also foresee bigger FIIs inflows into the Indian markets on the back of pick-up in domestic demand and the government at least partly succeeding in consolidating its finances.

Assocham President Rajkumar N Dhoot said in the next financial year, the numbers would look better.

"One of them would be a low base effect since the muted data of current fiscal would be the starting point to build on. Besides, the situation in the western markets is expected to improve in the next six to nine months since their central banks are trying to revive the consumer confidence," he added.

The job market may also look better. All these factors would have a positive impact on the Indian exports which are struggling at present, Dhoot said.

However, the survey respondents said that they do not expect India's exports to exceed USD 300 billion this year, but, the shipments would definitely be better in 2013-14.

Segments such as banking, power, infrastructure, civil aviation and real estate are particularly facing problems at present and most of the firms in these sectors are resorting to various means to get rid of excessive debts, it said.

Banks, in particular, have seen a big rise in their non- performing assets while the real estate firms are finding it difficult to liquidate their inventory, where large money is blocked, it added.

"While between the Mahurat trading of last Diwali and the current festivities, Sensex has gone up by about 1,000-1,500 odd points, the sentiment remains muted despite some pick-up in the last few months driven largely by the recent Finance Ministry initiatives," Dhoot said.

However, in the horizon of 9-12 months, the situation is expected to improve as the CEO respondents see inflation coming under large control, interest rates softening and the global environment improving, Dhoot added.

"While we manage to keep up our spirits high during this Diwali, we see better and brighter prospects in the second half of 2013-14," he said.

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