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ASSOCHAM Expects Short Term Improvement in Indian Economy

Oct 23, 2012 2:27 AM   By Dilipp S Nag
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RAPAPORT... India’s economic situation will likely improve significantly at the critical macro-level and for industry in the next six months, according to the latest ASSOCHAM Bizcon Survey (ABS). This is despite the fact that current domestic demand remains weak and the global markets remain uncertain, the survey noted.

The September 2012 survey was conducted against a prevailing economic slowdown and the deceleration of industrial growth, following a serious political logjam all of which played into measuring the business climate, said Rajkumar Dhoot, ASSOCHAM’s president. “It has raised industry concerns like high cost of credit, poor infrastructure and certain regulatory issues delaying the project take-offs.”

Yet, the industry is optimistic and expects both the overall economic as well as their individual situations to improve in the short to medium term, the survey noted. Cumulatively, about 60.4 percent of the respondents said that that overall economic situation would be better ahead.

At the industry level, 62.5 percent of industry shared the view that the performance should be better in the coming six months. The most optimistic outlook, however, came from the respondents who said the state of affairs will improve between September 2012 and March 2013.

The survey noted that at the firm level, 65 percent of the respondents said that  selling prices will remain more or less same. However, only 41.7 percent responded that their profits are going to be pretty much at current levels in short term, thereby indicating that corporate India may face pressure to maintain their profitability.

About 46 percent said that the situation would remain more or less the same in terms of new investment. However, there were more respondents, or 21 percent in  September compared with 13 percent in June,  who said that investments would be lower. About 66.7 percent of the respondents expected their firm’s orders  to improve in the next two quarter.

The factors that remain  of concern include weak demand from the domestic market, leading 54 percent to anticipate an adverse impact on performance. High costs of credit and increasing raw material prices are other major concerns.

To revive industrial activity, the survey suggested measures such as lowering interest rates and infrastructure development funding, among others.
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