Economic situation to improve in 6 months; but fiscal targets not achievable: ASSOCHAM

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Economic situation to improve in 6 months: ASSOCHAM
India's economic situation is expected to change for better in the next six months, although the fiscal targets set by the government are not achievable in the current scenario, according an ASSOCHAM Business Confidence Survey.

The mood, as captured by the Assocham Bizcon for December 2012 Round, seems to be improving at all the three -economic, industry and the firm levels.

"The latest round of the Bizcon survey connotes that economic situation has somewhat turned better in the last six months. Further, there is an expectation of situations to be much better in the short to medium term horizon at both industry as well as firm level.

Survey results indicate that majority of the respondents expect their sales volumes to be higher in the following quarter. Investments are expected to be somewhat constant in the coming six months," the chamber said.

However, the survey noted the concerns of the respondents over the precarious fiscal situation of the government.

"Rising fiscal deficit has been a major cause of concern for not only the policymakers but also the industry. The Bizcon survey's assessment of the nations fiscal situation showed that majority of the respondents firmly believed that the fiscal deficit target set by the Union Government is not achievable in the current scenario," said Mr. D S Rawat, Secretary General, ASSOCHAM.

However, in the coming six months there seems to be more optimism as majority of the respondents (cumulatively 48.1) are of the opinion that economic situation would be better.

Even at the Industry Level, about 52 per cent of the respondents were of the view that not much has changed, but over 50 per cent felt that the performance shall be better in the coming six months.

At the Firm Level: about 46.3 per cent felt that the situation has improved at the firm level. But an overwhelming 68.5 percent said that the situation would be better in the coming six months.

The survey results indicate that majority (40.7 percent) of the respondentsfeel that their profits are going to be pretty much at current levels in short term.

The industry at large feels (57.4percent) that the investment six months from now is bound to remain at levels that are there currently.

However, the worrying aspect when we see the results of the September 2012 and December 2012 rounds seems to be the fallen in the percentage of respondents to 22.2 percent from 29.2 percent who believe that investments are expected to be lower.

The factors affecting business were poor Infrastructure, high Cost of Credit and Increasing Raw Material Prices, said Mr. Rawat.

Read more about: assocham, economy, fiscal deficit
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