India Inc. optimistic about growth, economy in 2014

With 2014 beginning to unravel, most Indian businesses are optimistic about the growth of their operations and hold a positive outlook for the economy during the year ahead, according to the new research from Grant Thornton’s International Business Report (IBR). During the last quarter of 2013, 69% of businesses expressed optimism over the country’s economy in 2014, as compared to 57% in the third quarter of last calendar year. The appointment of Raghuram Rajan as the new governor of Reserve Bank of India seems to have steadied the economy and provided the much-needed confidence to Indian businesses.

India Inc.’s positive outlook echoes its expectations for growth of revenue, profitability and exports. 90% of Indian businesses believe their revenues will rise in 2014 while 76% are most optimistic for increasing profitability this year. This is a favourable shift of 4% and 11% for revenue and profitability respectively, as compared to the IBR findings for the third quarter of 2013. 35% of businesses are also hoping to witness a jump in exports vis-à-vis only 28% that were thinking on similar lines in Q3 of 2013.

Research & Development (R&D) initiatives are also likely to get a boost this year with 46% businesses betting big on R&D, as compared to 28% in the previous quarter. 65% businesses foresee a rise in employment in 2014, which is quite optimistic, given that 53% were of this view earlier.

Despite the optimism on several fronts, Indian businesses still feel the pinch with respect to low availability of finance. 52% of companies believe shortage of finance is likely to hurt their business and derail their growth plans in 2014. However, this is marginally better than 64% in Q3 of 2013. Other constraining factors include rising energy costs as 69% businesses believe it hampers growth besides regulations/red tape (74%) and lack of skilled workers (50%).

Commenting on the IBR findings, Vishesh C. Chandiok, National Managing Partner, Grant Thornton India LLP, said, “India has slipped from topping the optimism charts in the IBR for five consecutive years to now falling to no 8 on the global tables. With strong sentiment for change in the recent state elections and decisive actions by the RBI/government in recent months, it’s easy to see how medium to large businesses in India are more optimistic about the outlook for the economy in the coming months. Whilst the risk is expecting too much too soon from the current regime or any new regime, I certainly expect a dramatic turn in sentiment towards positivity from Q2FY14-15. ”

Drawing insights from the IBR, the Economist Intelligence Unit and the International Monetary Fund, a short report titled -‘Global economy in 2014′  is made available that considers the  health of the global economy and business growth prospects for the next 12 months. Click here to read the full report.