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  1. Business outlook: Since Narendra Modi became PM, not much changed on ground for industry, says Assocham

Business outlook: Since Narendra Modi became PM, not much changed on ground for industry, says Assocham

Business Confidence Survey results follow the months-long euphoria among industry leaders about prospects of improvement in business after Narendra Modi...

By: | New Delhi | Updated: February 1, 2015 5:15 PM
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The Business Confidence Survey results follow the months-long euphoria among industry leaders about prospects of improvement in business environment after a new government led by Prime Minister Narendra Modi stormed to power with a strong majority in May 2014. (Reuters)

Showing signs of restlessness, a majority of business leaders have said “not much” has changed on the ground in the last six months (since PM Narendra Modi became PM), while many of them do not foresee any change in investment plans even during the current quarter, as per an industry body Assocham survey.

The Business Confidence Survey results follow the months-long euphoria among industry leaders about prospects of improvement in business environment after a new government led by Prime Minister Narendra Modi stormed to power with a strong majority in May 2014.

“Not much has changed on the ground at the industry level in the last six months,” Assocham said citing its ‘Business Confidence Index’.

It, however, added that the situation is going to improve within first half of 2015, as reflected in the optimism about sales volume and hiring of workforce by corporates.

“As many as 54.2 per cent of the respondents in the confidence measuring survey said not much has really changed at the operating level in the last six months, but more number of industry leaders expressed optimism about the shape of things to improve going forward,” the industry body said.

The survey also found that 45.8 per cent of business leaders believe that the January-March 2015 quarter won’t see any change in their domestic investment plans, while similar outlook was noticed with regard to international investments.

Besides, the industry believes that export market will remain sluggish.

A considerable 41.7 per cent, however, expect hiring prospects to improve in the current quarter and the subsequent months.

The survey, which was conducted in December 2014, indicates that the general consensus (62.5 per cent) at the industry level seems to be that their performance in the coming six months would improve.

“Typically, investment follows improvement in sales and profitability. The latter things — sales and profitability — are falling in place and there would be a visible change in the next few months, following which investment should follow since there is always a lag,” Assocham Secretary General D S Rawat said.

With regards to the expected order books position in the January-March 2015 quarter, majority (58.3 per cent) of the firms seem to be optimistic and expect an increase in orders.

Thus, there are some indications of a possibility of a revival being seen in the demand within the economy. Export growth remained positive although the deceleration since July requires vigilance, it said.

Conditions in overseas market are bound to affect the Indian industries dependent upon them both as market sources and as input providers.

In terms of the wage costs scenario, the industry opines that in the October-December 2014 quarter, there has been no change in terms of the expenditure incurred on wages.

However, going forward, there seems to be some concerns as it is expected that the wage costs will be increasing in the January-March quarter, with almost half the respondents resonating this view.

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