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Indian CEOs Cautious on Growth Prospects: Survey

As the General Election dates next month edge closer, Indian industry remains cautious over short-term growth prospects for the economy.

The Federation of Indian Chambers of Commerce and Industry (FICCI) conducted a survey of 73 top CEOs of the country to gauge the business sentiment in the run up to the polls.

It found that around half of the participating CEOs felt that the economic situation would remain the same over the next two quarters. While 24 per cent respondents expected the overall economic situation to improve, a similar percentage pointed towards deterioration.

The survey results are based on responses from the representative body’s members across a wide array of manufacturing sectors including metal and metal products, food processing, printing, textiles, auto components, bio-resource energy, cement, machinery products and pharmaceuticals.

FICCI said in its statement: “The set of macro data releases continue to reflect weakness in the overall economic situation of the country. Though some key parameters like exchange rate, fiscal deficit, current account deficit have witnessed an improvement, investments have not really picked up and the manufacturing activity continues to limp.

“We need to rebuild confidence in the manufacturing sector on a priority basis to place the economy on a higher growth trajectory. At this point in time, reversing the domestic capex cycle from the present slump is very critical.”

The survey found a discernible moderation in profit levels in the fiscal year 2013-14. The participating companies expect this trend to continue in 2014-15 as well. Around 64 per cent of the respondents expect profit levels to remain at similar levels over the next two quarters. In addition, 24 per cent participants indicated that they foresee a decline in profits, with just about 12 per cent anticipating an increase.

On hiring, a majority of the 62 per cent respondents said that they do not intend to hire new employees in the next six months.

On investment prospects, the view seemed to be divided as 53 per cent indicated plans to undertake fresh investments in the near term but 47 per cent said otherwise.

The participants were also asked to indicate the top priorities for any new Indian government and they narrowed down: infrastructure development (especially resolving the issue of power), addressing corruption, cost and availability of finance, implementation of the goods and services tax, and simplification of rules and regulations.

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