Turnaround in economy in six months: ASSOCHAM

India’s top industry body ASSOCHAM has predicted that country’s economic situation will become better in the next six months, but expressed apprehension about fiscal targets set by the government. 

D S Rawat, Secretary General, ASSOCHAM

According to an ASSOCHAM Business Confidence Survey, the mood for December 2012 seems to be improving at all the three – economic, industry and the firm levels.

“The latest round of the Bizcon survey connotes that economic situation has somewhat turned better in the last six months. Further, there is an expectation of situations to be much better in the short to medium term horizon at both industry as well as firm level. Survey results indicate that majority of the respondents expect their sales volumes to be higher in the following quarter. Investments are expected to be somewhat constant in the coming six months,” the chamber said.

However, the survey noted the concerns of the respondents over the precarious fiscal situation of the government.

“Rising fiscal deficit has been a major cause of concern for not only the policymakers but also the industry. The Bizcon survey’s assessment of the nation’s fiscal situation showed that majority of the respondents firmly believed that the fiscal deficit target set by the Union Government is not achievable in the current scenario,” said D S Rawat, Secretary General, ASSOCHAM.

In reference to the recent approval given to multi-brand retail the survey reveals that the industry feels that while the measure would have a positive impact on farmers, consumers, rural youth, employment and in reducing inflation, it would negatively affect small retailers & SMEs.

As for the macro picture at the economy level, majority of the industry feel (38.9 per cent) the present economic situation has more or less remained same to the situation that was back there around Sept 2012.

However, in the coming six months there seems to be more optimism as majority of the respondents (cumulatively 48.1) are of the opinion that economic situation would be better.

Even at the Industry Level, about 52 per cent of the respondents were of the view that not much has changed, but over 50 per cent felt that the performance shall be better in the coming six months.

At the Firm Level: about 46.3 per cent felt that the situation has improved at the firm level. But an overwhelming 68.5 percent said that the situation would be better in the coming six months.

For the business perspective, 48.1 per cent of the respondents feel that their sales volume will increase but majority of them also said that the manufacturers would not be able to increase the selling prices which will more or less the same.

The survey results indicate that majority (40.7 percent) of the respondents feel that their profits are going to be pretty much at current levels in short term. 

The industry at large feels (57.4percent) that the investment six months from now is bound to remain at levels that are there currently. However, the worrying aspect when we see the results of the September 2012 and December 2012 rounds seems to be the fallen in the percentage of respondents to 22.2 percent from 29.2 percent who believe that investments are expected to be lower.

For exports, a clear picture does not seem to emerge as the survey results shows that an equal percentage of respondents (29.6 percent) feel that exports will either remain at the same level or be higher, thus there seems to be uncertainty with respect to the demand emanating from the overseas market.

The factors affecting business were poor Infrastructure, high Cost of Credit and Increasing Raw Material Prices, said Rawat.