Business sentiment in India weakest since 2014; ranks 6th on optimism index: Grant Thornton

After topping the chart for four years, India has been ranked 6th on the global optimism index in the first quarter of 2018, a survey by Grant Thornton’s International Business Report (IBR) said. The report says the business optimism in India has deteriorated while entering the last year of the current regime. Though the initial years of the Narendra Modi-led government saw India on top of the chart, the confidence has shaken since Q3 2017 with a weakening currency and a surge in oil prices, the report said, adding that the business optimism is at an all-time high of 61 per cent, the highest in 15 years, globally.

The report was prepared based on the results of a survey of 2,500 businesses in 37 economies. “The reversal in sentiment amongst mid-sized businesses in India in the last three quarters is startling.

The report claims the underlying pessimism is reflected in other parameters as well, including revenue, selling prices, profitability, employment, and exports expectations. Revenue expectations have been slipping from the top position in Q2 2017 to 14th in the fourth quarter of FY18. The country’s ranking on the expectation for higher selling prices dropped from 6th in Q1 2017 to 7th in the first quarter of the current financial year. Employment expectation was also ranked 6th in the first quarter. India’s profitability has also been ranked 13th in the first quarter. In terms of export expectation, India was ranked 9th in the first quarter of current fiscal from 18th spot in the last quarter of 2017, said the report.

While Indian businesses have shown interest in investing in new buildings in recent years, they haven’t given much impetus to investment in plant and machinery, said the report.

The businesses in India have been citing regulations and red tape, availability of skilled workforce, lack of ICT infrastructure, and the shortage of finance as the biggest growth constraints claimed the report.

Commenting on the global optimism being at an all-time high, Francesca Lagerberg, Global Leader Network Development at Grant Thornton said: “Businesses report healthy and widespread levels of optimism. This is a welcome indication that the global economic recovery is finally broad-based. We haven’t seen such high optimism levels for some time, not least in Spain, Italy, and Greece. Why is business optimism so high? A likely factor is that globally, the economic fundamentals are strong. The strongest they have been since the financial crisis. GDP growth in most regions is growing. We are seeing a broad-based and inclusive spell of economic growth across markets.”

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *