India's growth is more robust than many large global economies, says CII

The Indian economy has shown that it is more robust than many large global economies, a report from CII has shown. A conducive domestic policy environment, along with healthy performance of key macroeconomic indicators, have sustained the economy's growth momentum, the report said. The CII Business Confidence Index (CII BCI) improved to a reading of 66.1 in Q1 Apr-Jun FY 24 as compared to 64.0 in the previous quarter, showing a positive momentum in indicators such as GST collection and air rail passenger traffic. The 63 percent of over 180 firms surveyed in the Business Outlook Survey expect India to grow 6 - 7 per cent for FY24, similar to RBI's growth forecast of 6.5 per cent for this fiscal year. In line with RBI projections of 5.1 per cent of inflation in FY24, 86 percent of the respondents expect inflation to fall below 6 per cent in FY24. 65 percent of those polled believe that the recent increases in private investment will be permanent during the current fiscal year. Several factors that are driving private capex such as deleveraged corporate balance sheets, which has in turn increased the capacity of the corporates to invest once there is clear visibility on demand, CII said. As part of the survey, 62 percent ofsurveyed expect muted global growth and geopolitical turbulence as the key business concerns in the current fiscal year. To preserve growth impulses, it is crucial for the RBI to stick with a pause on the interest rate. This was emphasised in the survey results, as 53 per cent of thesurveyed said the RBI would maintain status quo on the key interest rates in the first half of the current fiscal year. The positive momentum seen in CII's Business Confidence Index in the first quarter of the current fiscal year is encouraging and reiterates the on-ground experience of most of the industry players, said CII director-general Chandrajit Banerjee. The increase in demand has resulted in a surge in capacity utilisation in many sectors which will provide further impetus to private capex this year, the RBI's interest rate pause is expected to raise the cost of capital for India Inc, fuelling fresh investments and giving private capex a further leg-up, the survey said. There is already signs of increase in capacity utilisation of the respondent companies, with more than half 52 percent expecting it to stand in a range of 75 - 100 percent in April-June, up from 45 percent in the previous quarter. As of Q1- FY24, 47 percent of the respondents expect an increase in employment, compared to the actual number of 43 percent in the previous quarter. In contrast to the improvement in business sentiments, expectations for the June quarter FY 24 have turned sanguine, with a majority of the respondent expecting an increase in sales 55 per cent and count of new orders 57 per cent. Consequently, the profit outlook for the quarter has increased as over one third of the respondents 38 per cent foresee an increase in profits, despite the majority of them indicating high input costs. In the first half of this year, 71 percent of thesurveyed expect average brent crude oil price to remain range bound within the US $70 - 80 barrel range, according to the survey. The Indian economy is a beacon of growth as amidst a bleak global scenario, driven by softening inflation and government capex. Although the lagged impact of RBI's rate hikes will take some bite off growth, well capitalised financial system and healthy corporate balance sheets will support growth, Banerjee said. The 123rd round of the Business Outlook Survey took place from May 2023 to June 2023, and had the participation of more than 180 firms of various sizes and across all sectors and regions of the nation. 64 per cent of firms benefited from the MSME sector, compared to the rest of the industry.