Rising crude oil prices along with hardening interest rates in the domestic market have led to India Inc’s growth outlook taking a hit in the first quarter of the current fiscal.

Despite a record profit growth in Q1 2006, this is by far the worst outlook—as per industry chamber Ficci’s quarterly business confidence survey—in the past five quarters.

For the next six months, the growth outlook dropped from ‘significantly optimistic’ to ‘moderately optimistic’ in all operational parameters like sales, profits, investments, employment and exports. Overall business confidence has gone down drastically from a high of 85% in the previous quarter to 58% in this quarter.

‘‘The survey sounds a warning bell for the future even as a majority of the respondents remain optimistic. The outlook is not negative but there is uncertainty regarding oil price and interest rates,’’ said Ficci Secretary General Amit Mitra.

The projections of the survey for the next six months are also bleak with almost 36% of the respondents expecting no improvement in overall economic conditions and another 12% expecting it to deteriorate.

Though a majority 60% of the respondents were satisfied with the current performance of their industry sectors, the number has dipped as in the previous survey 77% of the respondents were satisfied with the growth levels.

For the coming six months, the industry outlook on sales has dipped with 70% of the respondents expecting higher or much higher sales (76% in the last survey). The biggest decline in confidence has come for exports with the confidence index plunging to an all-time low of 25. The index for the previous quarter stood at 62 while the index for the corresponding quarter in the last fiscal was 27.

... contd.