Rising interest rates hit invesment: CII

The survey pointed out that 89% of the respondents had not increased investment due to rising interest rates. In fact 38% reported a decline in investment.

The survey is based on responses received from industry across the northern region states-Delhi, Haryana, HP, J & K, Punjab, Rajasthan, UP and Uttarakhand. As many as 59% of the respondents were from the manufacturing sector, 36% from the service sector, 41% from SSIs, 30% from SMEs and 29% from large organisations. The survey was undertaken during the period 20 July to 19 August.

Only 40% of the respondents expect the GDP growth to be more than 8% which reflects moderation in growth expectation in the current quarter. Only 31% of the respondents expect an increase in capital investment in this quarter as against 47% in the previous survey which indicates a likely moderation in the investment activity.

The survey also looked into the expectations on various elements that build up business confidence viz _ capacity utilisation, sales, new orders, production, employment and pre-tax profit are all positive.

About 64% of the respondents expect overall sales to increase as against only 39% reporting an increase in the previous quarter. This optimism is also reflected in expectations of higher new orders, production, employment and pre-tax profits. However, expectation of rising raw material costs continue in the current quarter. About 65% of the respondents expect an increase in raw material cost as against 76% reporting an increase in the previous quarter. As many as 56% of the respondents expect an increase in volume of exports and 55% of the respondents expect an increase in new orders.

High interest rate has moved to second spot from top slot in the previous survey. Inadequate skilled labour is the third most important concern. Infrastructure and institutional shortages and slackening consumer demand are the fourth and fifth most important concern respectively for the Indian Inc.