India slips to 7th position in Global Business Optimism Ranking

India has slipped to 7th position in ‘business optimism’ index in September-November quarter period from earlier 2nd slot in the previous July-September quater. The fall in rank clearly shows clear signs of lag in the economy.
The index was released as part of Grant Thornton’s International Business Report (IBR). The IBR provides insight into the views and expectations of more than 10,000 businesses per year across 36 economies.

Key Facts

In September-November quarter, the index was topped by Indonesia, followed by Finland (2nd), Netherlands (3rd), Philippines (4th), Austria (5th) and Nigeria (6th).
Globally, overall position for business optimism remains relatively high at 49% in September quarter. It was down by 2 pps in June quarter, and follows five consecutive quarterly increases in business sentiment.
Indian businesses have expressed low confidence over revenue expectations in next 12 months. They also saw a drastic fall in confidence for profitability with 54% showing optimism as against 69% in the last quarter.
Moreover, other parameters like expectations of increase in selling prices and exports also have suffered fall in optimism which shows clear signs of lag in the economy which caused the drop in ratings.
However, Government actions and reforms coupled with significant jump in Ease of Doing Business Rankings may bring back optimism in Indian Business in next few quarters. Optimism remained intact in areas of investment in plant and machinery and Research & Development (R&D).
Regulations and red tape and lack of ICT infrastructure are biggest growth constraints mentioned in optimism rankings. Indian businesses also identified shortage of finance and lack of skilled workforce as reasons for lack of optimism. Indian businesses are still optimistic about increase in employment as 54% respondents expressed need to increase hiring in next 1 year, three- point rise from June quarter.

Month: Current Affairs - November, 2017