The CII Business Confidence Index (CII-BCI) for October-December 2011 declined by 5.0 points to 48.6 from 53.6 in the previous quarter, though the extent of the decline has moderated.

The BCI has been falling in every successive quarter since the last quarter of 2010-11, and has fallen by a cumulative amount of 18.1 points.

The Confederation of Indian Industry survey, which is based on a sample size of 250 companies, showed that a majority (37.2 per cent) of the respondents expected the GDP growth rate to moderate to 7.0-7.5 per cent. On inflation, most respondents (46.8 per cent) expect average inflation to be above 9 per cent.

A major concern is that most firms, particularly small ones, expect domestic and international investments to fall or remain stagnant in the quarter ending December 2011.

On capacity expansion, the survey shows that 56.9 per cent respondents are expecting to continue with the same level of spending in the third quarter of this fiscal, as in the second quarter.

Also, the majority continue to expect credit availability to be constrained in third quarter. Employment, too, showed stagnation in second quarter of this fiscal with 81.4 per cent respondents declaring stagnancy or decline. A dominant 75.9 per cent experienced a rise in input cost as a consequence of rupee depreciation.

MSMEs

Another survey by CII for micro, small and medium enterprises (MSMEs) showed that the BCI declined marginally by 0.3 points to 54.3 for the quarter ending March 2012.

Among these, the services sector is expecting better outcomes compared with the manufacturing sector on 13 of the 17 variables analysed.

These include gross sales, net profit margin, capacity utilisation, capacity expansion, employment, exports, selling prices, credit cost and credit availability. However, the manufacturing sector has done better than services in the case of new orders/contracts.

> heena.k@thehindu.co.in

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