Business sentiment in India weakest since 2014

By:Vandita Jadeja 2018-05-11

According to a survey by Grand Thornton, India has been ranked 6th on the global optimism index in the first quarter of 2018. The report stated that the business optimism in the country has gone down while entering the last year of the current regime.

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The initial years of the Narendra Modi government saw India at the top of the chart and the confidence has shaken since Q3 in 2017 with a surge in oil prices and weakening currency. The report added that business optimism is highest in 15 years at 61 percent. This report was prepared according to the results of a survey of 2,500 businesses across 37 economies. This change in sentiment amongst the mid-size businesses in India is startling. India is in the election year and it is time to brace for a volatile economy in the days ahead.

Further, the report claims an underlying pessimism which is reflected in other parameters including profitability, selling prices, exports and revenue. The revenue expectations have slipped from the top position to 14th in a year. The ranking of the country on expectation for higher selling prices has also dropped from 6th in 2017 to 7th in 2018. The employment expectation was ranked 6th in the first quarter and the employment expectation was ranked in the 6th in the same period. Profitability in the country has been ranked at the 13th and export expectation has been ranked at 9th from 18th in 2017. Not much importance has been given to investment in plant and machinery over the years. However, Indian businesses have shown an interesting into investing in new buildings.

Business in the country have been citing red tape, regulations, lack of ICT infrastructure, lack of skilled workforce and shortage of finance as the growth constraints, according to the report. Although India has jumped in World Bank’s Ease of Doing Business ranking, the country needs to overcome the hurdles for growth. The global optimism is at an all-time high which is a good indication that the global economy is recovering. The reason behind the same is high economic fundamentals since the financial crisis.