India Inc. is hoping for an improved capacity utilization in the next two quarters but does not expect any uptick in investment and corporate earnings even as the overall macro situation would change for better, according to an Assocham Bizcon Survey.
The Survey, capturing the reading of the economy as also the firms at the individual level in December noted that 62.5 per cent of the respondents felt “the state of economy would be better in the coming six months”, although not much had changed in the past six months.
Lack of investment appetite in the private sector in the backdrop of lower capacity utilization, excess supply and continuous pressure on profitability are the areas of concern, for the next few quarters.
“In terms of the domestic investment, 58.3 per cent felt that there has been no change in the investment plans at the level of individual firms. The sentiment seems to remain muted, going forward with 62.5 per cent respondents of the view that January to March 2016 quarter would not see much change in the investment levels. Thus there seems to be a continuing lack of appetite for new investment in the private sector”, the Bizcon Survey said.
Assocham secretary general D S Rawat shared the concerns brought out by the respondents in terms of pressure on profitability and lack of investment. “Global deflationary situation creeping into India in several sectors is hitting investor sentiment. The consumer confidence can return only if there are more job opportunities through higher investment into productive areas of the economy like construction, infrastructure and manufacturing. The lead, has to be taken by the government which has an onerous task before itself along with financial sector regulators like Reserve Bank of India and SEBI to ensure investor confidence in the markets which can then feed the investment climate”.
Broadly in line with the macro picture, the Survey also found similar state of affairs at the industry level, which is, however, hopeful and optimistic for the short to medium terms, at least in projecting better sales volume and capacity utilization.
