Government of India’s (GoI) unwavering commitment to policy reforms, an unprecedented demonetisation drive and constant push for a faster GST implementation are the reasons why optimism in India remains high as compared to other large economies. As per the findings of Grant Thornton International Business Report (IBR) survey, Indian businesses are optimistic about economic recovery with 85 per cent respondents echoing this sentiment in the first quarter of 2017. India takes the fourth position on the global optimism index during the January-March quarter of 2017, and is behind small economies like Indonesia, Philippines and Malta. India is significantly ahead of China where 48 per cent respondents are optimistic for economic growth.
The scale and the report, are prepared basis the results of a quarterly conducted global business survey of 2,600 businesses in 37 economies.
Optimism is also reflected in the rise in confidence during Q1 2017 for an increase in exports as 34 per cent respondents expected a surge in exports against 28 per cent in the last quarter.
Indian businesses are optimistic about most facets like employment with 56 per cent respondents expecting a rise and profitability expectations where 55 per cent are optimistic for an increase.
“Indian businesses continue their optimism in business over a long period of time as compared to all larger economies like China, US, Europe, UK etc. This shows the confidence of the business and a positive reflection on government policies. The implementation of GST should give a further boost to Indian optimism. The overall increase in global optimism is a positive signal that we can expect businesses to perform even better in future and that is reflected in the Indian Stock Market” said Harish HV, Partner – India leadership team, Grant Thornton India LLP.
Indian businesses are also confident about increased investments in plant and machinery and new buildings. The IBR survey shows that expectations for an increase in investment in plant and machinery have risen by five points from 50 per cent to 55 per cent this quarter. As far as investment in new buildings goes, 45 per cent respondents have voted for an increased investment as against 42 per cent in the previous quarter.
The survey establishes that lack of finance and strong ICT infrastructure remains the biggest concerns for Corporate India. While India ranks second in citing regulations and red tape as growth constraints, there is a constant decline in the number of respondents who agree with this. In Q1-2017, 56 per cent of the respondents have quoted this as an obstacle against 57 per cent in Q4-2016 and 59 per cent inQ3-2016.
Globally, business optimism is at its peak at 49 per cent. The report shows that confidence is particularly strong in the US, where levels have surged from 54 per cent in Q4 of 2016 to a 14-year high at 80 per cent. This surge in optimism among mid-market decision-makers bodes well for the overall economy because this segment often acts as the engine room for broader economic growth.
Francesca Lagerberg, Global Leader at Grant Thornton, said:
“As the world’s largest economy, US business confidence sends a shot of endorphins throughout the global market. It’s encouraging, therefore, to see that close neighbours and countries with strong trade links are also riding a new wave of hope. But clearly US businesses are not yet seeing or expecting this to result in bottom line change over the short term. Businesses await follow through on promises related to spending, de-regulation and tax cuts, while stock markets continue to react to daily policy developments.”
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