2019-08-11_Business_Today

requirement and profits.
For instance, 55 per cent of respondents
are expecting no change in the overall busi-
ness situation in the July-September quarter
compared to 42 per cent who expected the
same in the previous survey. Similarly, 58
per cent of respondents foresee sales at the
same level as in the previous quarter. In the
last survey, the corresponding number was
34 per cent. The survey points out that 65
per cent of the respondents think that the
Union Budget has not done enough to boost
economic growth while 57 per cent of the re-
spondents are not sure about making fresh
investments over the next two quarters.
“The Budget was growth neutral. Some
of the things that the government is do-
ing such as bank recapitalisation and sup-
porting non-banking financial companies
through partial guarantees are not going to
give a big boost. There was some improve-
ment in capacity utilisation. But with the
economy slowing down, investment deci-
sions get postponed. So, a meaningful reviv-
al of private investment is unlikely this year,”
says Joshi of CRISIL.
Although the Reserve Bank of India
(RBI) has reduced the repo rate by 75 basis
points (bps) in three instalments during the
calendar year, the survey shows that a big-
ger number of respondents is pessimistic
about the availability and cost of finance.
For instance, 55 per cent of the respondents
believe that the cost of finance will be a ma-
jor issue in the quarter ending in September.
“On the fiscal side, the government does
not have too much space. We have seen the
focus moving purely to the monetary side to
stimulate the cycle. If there is risk aversion,
rate cuts would not entirely help. Even if
there is a 100 bps rate cut at this point, I do
not see many investors and consumers tak-
ing the plunge,” says Thakur of RBL Bank.
However, credit squeeze has been a seri-
ous concern for businesses with short-term
working capital requirements. It is estimat-
ed that 30-40 per cent of the current slow-
down is due to the credit squeeze and a rate
cut will help in these cases.
As per the survey, 44 per cent of the re-
spondents do not expect private consump-
tion to bounce back in the next six months.
Demand for passenger vehicles, FMCG,
consumer goods and air travel have reg-
istered decline over the past few months.
According to a recent Nielsen India report,

BUSINESS CONFIDENCE INDEX

The Dip

How would you rate April-June conditions

compared to the Jan-March quarter?

Profit Margins

35% say the quarter was

worse than the previous one

Overall Economic Conditions

37% say things worsened

in April-June quarter

Demand

Conditions

Only 21%

saw an

uptick

2

Hiring Conditions

Half saw no

change

44 IBUSINESS TODAYIAugust 11 I 2019

7

30

39

23

1

Availability of

Business

Finance

Situation

worsened

for one-third

respondents

7

28 15

2

48

7

32

49

11

1

6

19

32

41

7

3

26

43

21