India Inc 's confidence has slipped ahead of the budget as the industry fears that the rising input costs could lead to a slowdown in the industrial output over the next six months, a survey by the Federation of Indian Chambers of Commerce and Industry (Ficci) said.
"Buffeted by rising raw material and manpower costs and the threat of food inflation spilling over to the manufacturing sector, the confidence level of corporate India has slipped ahead of the Union Budget 2011-12," according to the Business Confidence Survey by Ficci.
The survey reveals a fall in the overall business confidence index to 63.8 from 76.2 in the previous survey. The expectations index for the next six months has also slipped from 76.6 to 64. "India Inc sees industrial growth slowing down in the next six months," the report added.
The report identifies input cost inflation as one of the biggest problem areas. Close to 90 per cent of the firms that participated in the survey point to rising cost of raw materials and industrial inputs as a 'negative factor' that is impeding their business performance.
The survey also said that companies are increasingly facing demands for higher wages and salaries, which is complicating their cost structure further. Almost 70 per cent of the respondents said they are under pressure due to rising manpower costs, the secondbiggest threat to the industry's bottomline.
One out of four firms expects its profit level to be lower over the next six months and as a result companies are struggling to hold the price line of their goods and services. Nearly 53 per cent of the firms said they plan to raise their prices over the next six months. The industry also said that while current demand situation appears satisfactory, the near term order book position is showing some signs of moderation.
Fearing a slowdown Ficci has urged finance minister Pranab Mukherjee not to raise excise duties or roll back stimulus for the sector in the forthcoming budget.
Courtesy: Mail Today
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