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Home arrow News arrow Business News arrow Production value to increase in next six months: CII
Production value to increase in next six months: CII Print E-mail
Written by Anand   
Monday, 31 December 2007
NEW DELHI: Business Confidence picks up for period October – March 2007-08 after a decline during the period April-September 2007-08, said CII’s 68th Business Outlook Survey. CII’s business confidence index (CII-BCI) at 66.3 was higher for the period October – March 2007-08 with an increase of 2.4 points when compared to the previous Business Confidence Survey for the period April-September 2007-08. However, the Business Confidence Index is down by 5.5 points when compared to the corresponding period last year. The CII-BCI, constructed as a weighted average of the Current Situation Index (CSI) and the Expectations Index (EI), was higher among the non-manufacturing firms (68.3) engaged in provision of services as compared to manufacturing firms (65.1).

 

The CSI that compares current business conditions has witnessed a marginal increase of 0.2 points for the period October -March 2007-08 when compared with the previous six months.  However, when compared to the corresponding period last year, the CSI is down 6.3 points, thus reflecting a decrease in current business sentiments. This reflects that a larger number of responding firms have not appraised better current conditions for growth of the overall economy, the sector in which they operate and their individual company growth performance to be no better compared to the previous six months, April-September 2007-08.

The EI that reflects the perceptions of Indian industry with regards to performance of their company, sector and the Indian economy for the period October-March 2007-08 gained 3.5 points over the first half of the current financial year reflecting higher expectations in terms of performance during the second half of 2007-08.  However, the EI for second half when compared to the corresponding period last year is actually down by 5 points reflecting a lower growth expectations of GDP and other aggregates during 2007-08.

The CII survey revealed that GDP growth for the year 2007-08 is expected to be around 9%. This was revealed by 59% of the respondents and of these 22% of the respondents expect the GDP growth to be in the range of 9 – 9.5%.

The survey also revealed that 87 per cent of the respondents plan to increase investments during October – March 2007-08. Capacity utilization across the board has increased and 59% of the respondents have revealed that capacity utilization for October–March 2007-08 would be in the range of 75-100 per cent.

While expectations on capacity utilisation are normal, inventory levels are on higher side. The CII survey revealed that 45% of the respondents expect the inventory levels to increase. Though this is marginally better than the previous survey, overall higher inventory level indicates signs of declining demand especially in consumer durables sector.

The value of production is also expected to increase in the next six months. This was revealed by 82 per cent of the respondents. In fact, for 66 percent of the respondents production increased in the first half of 2007-08. Further increase in production is likely because of expected increase in new orders. The second half of 2007-08 is expected to be better in terms of increase in new orders as 75 per cent of the respondents expected new orders to increase in the next six months, while about 61 per cent of the respondents revealed that new orders had increased in the first half of 2007-08.

Keeping in line with expected increase in production, employment is also expected to increase in the second half of this financial year. This was revealed by 51% of the respondents, who expected employment to increase during October–March 2007-08. According to the CII survey employment had increased during the period April–September 2007-08 as revealed by 51% of the respondents.

On exports, 67% of the respondents expressed confidence in exports expansion for the period October-March 2007-08. While 53% of the respondents revealed that exports had increased during April-September 2007-08, 88% of the respondents felt that the procedural delays have not reduced. This has been a long-standing hurdle for exporters, which raises transactions costs and needs to be addressed urgently. More importantly 87% of the respondents don’t see any change to be happening on procedural delays for the period of October-March 2007-08.

 
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