CII’s 121st edition of the Business Outlook Survey indicates a jump in business sentiment during the Oct-Dec 2022 quarter as the index rose to its highest in almost two years, scaling the level of 67.6 during the quarter which was up from the previous quarter level of 62.2.
Despite the global headwinds, most of the respondents (73 percent) felt that the much-anticipated deceleration in global growth is likely to have only a moderate impact on the Indian economy, with another 17 percent of the respondents anticipating no impact at all. The confidence among respondents stems from the fact that a significant majority of them (86 percent) believe that the governments focus on infrastructure is the biggest positive for the Indian economy.
On the growth front, majority of the respondents (70 percent) hold the view that the Indian economy will expand in the range of 6.5% to 7.5% during FY23. However, inflation expectation continue to remain elevated as nearly two-thirds of the respondents (61 percent) foresee inflation above the RBI’s comfort level of 6% for a minimum 6 months or even more.
On the investment front, nearly all the respondents (90 per cent) feel that their company’s investment cycle will recover during the next financial year, with around 52 percent expecting the recovery during the first half of next fiscal while about 37 percent of them foreseeing a pickup in investments by the second half of the year.
Further, there are increased expectations of a recovery in rural demand with about 60 percent of the respondents indicating that they foresee a pick-up in rural consumption during FY24. Given that India’s rural economy is a significant contributor to the nation’s overall economic activity, recovery in the rural demand is eagerly awaited.