New Delhi: Business activity gained further momentum in the July-September quarter, with business confidence rising to a three-quarter high, according to a private survey.
The Confederation of Indian Industry’s Business Confidence Index showed that two-thirds of the respondents believed that sales and new orders rose faster in the second quarter of the ongoing financial year compared with the previous quarter, whereas more than half expected capacity utilisation to average 75-100% – five percentage points higher than the previous quarter.
“This is an encouraging sign as capacity utilisation needs to be maintained between 75-80% to fuel fresh investments in the economy,” said Chandrajit Banerjee, director general of CII.
Private surveys released last week showed that future outlook improved for manufacturing and service sector firms. The S&P Global India Composite PMI Output Index rose to 61 in September from 60.9 in the previous month, exhibiting one of the strongest expansion rates in nearly 13 years.
The government raked in Rs 1.63 lakh crore in GST revenue in September, up 10% from a year earlier.
Two out of three of the 200 companies surveyed by CII expected the country to log 6-7% growth in FY24, with 52% anticipating an improvement in rural demand in the first half of the fiscal.
“The expectation of an improvement in rural demand is reassuring and is much required for the inclusive growth of the economy,” Banerjee stated.
Indian economy registered a 7.8% growth in the first quarter of FY24 on the back of domestic demand, services growth and the government’s capex push.
Over half of the respondents to CII survey said improving the ease of doing business and the government’s capex push will likely crowd private investments.
“This will stimulate growth in other sectors of the economy through its multiplier effect,” a CII release said.
On the rate front, 58% of respondents were assured that the central bank would hold the policy rate for the second half of the year, with 11% expecting a rate cut.
The Reserve Bank of India’s Monetary Policy Committee held the policy rate at 6.5% for the fourth consecutive time at last week’s meeting. The MPC also retained India’s growth and inflation outlook for FY24.
Nearly a third believed that imposing export duties on commodities would likely be most beneficial to tame inflation.
