India ranks 2nd on the business optimism index despite China’s slowdown

India Inc has emerged as the second most optimistic in terms of business optimism globally with a survey showing that 86 per cent of Indian respondents are bullish about an increase in revenue of their companies.

According to the Grant Thornton International Business Report, a quarterly global survey of 2,580 business leaders, India ranked second after Ireland in terms of the business optimism.

Business confidence and expectations for revenue and exports are down in several major economies that have China as a major trading partner.

“India is relatively insulated from the slowdown in China and sees a slight gain in confidence, despite falling exports,” the survey said while taking note of RBI’s recent interest rate cut by 50 basis points to support growth.

As per the survey, 86 per cent Indian businesses are optimistic about an increase in revenue compared to 83 per cent last quarter. Moreover, Indian businesses are also positive about profitability with 69 per cent respondents expecting a rise in the profits.

“Indian businesses have been consistently optimistic in their business outlook over the past decade barring a couple of quarters. This is based on the underlying strength of the economy, the consistent high growth rate, the entrepreneurial dynamism in being able to create new opportunities and businesses and the lower reliance on global trade based on significant domestic demand,” Grant Thornton India LLP Partner – India Leadership team Harish HV said.

However, there was further fall in optimism on the rise of employment aspect with only 52 per cent Indian businesses hoping for the same.

“The concern based on the results of this survey is the pessimism on employment, which is a key factor and need for the country given the demographic dividend which could turn into a demographic nightmare without adequate employment generation. The Government’s thrust on ‘Make in India’ needs much more push to make it a reality and that could salvage the situation,” the report added.

The survey noted that ICT (Information Communication Technology) infrastructure is the biggest concern for Indian Businesses followed by lack of skilled workers and red tape. Also, there is not any major improvement in the expectations of an increase in R&D activities and exports in the country from the last quarter.

The article appeared in the Business Standard. The article can be found here.