India's business confidence strengthened to an all-time high in the first three months of the year, as companies expect the activity momentum to gain steam in coming months to sustain the economic recovery, results of a survey showed Monday.
The CII Business Confidence Index rose to a record high 64.1 in the January to March quarter from 56.5 in the previous three months, the Confederation of Indian Industry said. The sharp rise came after the index remained subdued in the past few quarters.
The results are from a quarterly survey based on around 200 responses from large, medium, small and micro firms, covering all regions of the country.
"The turnaround in business expectations, as indicated in the survey, gives credence to the belief that a new growth narrative is being scripted for the country based on improved business sentiment and investor confidence," CII Director General Chandrajit Banerjee said.
"A sharp uptick in business outlook, at the onset of 2017, underpins the hope that the reform initiatives of the government would unravel a host of investment opportunities for firms, going forward."
The latest improvement in the headline index was largely led by a sharp rise in the Expectations Index, while the Current Situation Index climbed modestly.
The survey showed that 63 percent of the firms expect an increase in sales versus only 39 percent in the previous round. Sixty percent of the respondents anticipate an increase in new orders, again a strong improvement from 41.0 percent in the previous quarter.
The recovery is likely to be largely led by demand from the domestic market as a large proportion of firms, 61.8 percent, expect to maintain status quo on their export orders, the survey said.
Signaling that the turn of the investment cycle is now imminent, majority of firms expect an improvement in capacity utilization in the fourth quarter of the fiscal 2017. That said, they do not expect any change in their domestic and international investment plans.
Low domestic demand, a fragile global economic recovery and a rise in commodity prices were the main concerns for firms for the next six months, the survey showed.
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