Slip, Trip And Fall

Business confidence falls for the second straight quarter as corporate leaders give the thumbs down to the Union Budget and remain sceptical of consumption pick-up and future investments, finds the latest Business Today-C fore Business Confidence Survey.

- Manu Kaushik

Mumbai-based Rajni Thakur is an economist working for RBL Bank. She spends 40 per cent of her work time interacting with clients hailing from automotive, start-up, software, textiles and other sectors, and every week helps 150-odd clients take calls on interest rates and transactions in foreign exchange. Thakur says her clients’ confidence level has dipped sharply over the past six months. “Before elections, there was a sense that things would get better after polls were over. But during this earnings season, most of the management-speak has been around how consumption is going to slow down. Nothing fundamentally has changed in the economy, but we see negative sentiments,” she says.

The weak sentiment of her clients seems to echo in the latest Business Confidence Index (BCI) survey conducted for the April-June quarter. The BCI for the quarter went down for the second consecutive time as corporate India gave the thumbs down to the Union Budget and remains sceptical of consumption pick-up and future investments. The BCI – on a scale of 100 – declined to 48.5 compared to 49.7 in the previous quarter and 50.5 in the quarter before that. Market research agency C fore quizzed 500 CEOs and CFOs across 12 cities for the survey.

“Some headwinds are pulling the sentiment down and high-frequency data is showing weakness. The first quarter of the current fiscal is not likely to be good and that is getting reflected in sentiment,” says D.K. Joshi, Chief Economist at CRISIL.

The survey shows that a large number of respondents believes there will be status quo in overall business situation, financial situation, sales, production level, order book, supply side, raw material inventory and hiring in the current quarter. Some respondents are expecting the situation to worsen in areas such as overall economic situation, availability of finance, working capital requirement and profits.