The Meltdown

Business confidence takes a beating as top executives expect high crude oil prices and depreciating rupee to affect economic fundamentals, finds the latest Business Today-C fore Business Confidence Survey.

- Manu Kaushik

Corporate India is spooked, and there are plenty of reasons for that. The rupee is in a free fall and soaring crude oil prices are widening the current account deficit, or CAD, hitting government finances. This has created a problem for policymakers and uncertainty for India Inc. The latest Business Confidence Index (BCI) survey conducted in the July-September quarter reflects a drop in confidence levels of business leaders. Market research agency C fore quizzed 500 CEOs and chief financial officers across 12 cities for the survey. Based on the results, the BCI is 48.7 – on a scale of 100 – lower than 49.3 in the previous quarter and 50.6 in the quarter before that. It is also lower than the 51.4 in JanuryMarch 2014, just prior to the Modi government coming to power.

The index has been falling this financial year, though it is still higher than it was the previous year. In the quarter ended September 2017, the BCI had fallen to its lowest level (45.1) since the survey began more than seven years ago.

“Many external factors that Indian corporates were taking for granted, have begun to hurt. The consequences of radical changes such as the tariff war between China and the US, sanctions on Iran and withdrawal of the super-accommodative monetary policy in the west have become more pronounced,” says Abheek Barua, Chief Economist at HDFC Bank. After a series of steps taken mid-September, finance minister Arun Jaitely recently allayed investor fears by promising to take more steps to stabilise the rupee and bring down CAD.