CII Business Confidence Index Rises to a Two-Quarter High
The Indian economy continues to show resilience despite global challenges. According to the latest findings from the Confederation of Indian Industry’s (CII) Business Confidence Survey, optimism within India Inc. remains high. The CII Business Confidence Index soared to a two-quarter high of 68.2 in the second quarter of FY25 (July-September), compared to 67.3 in the previous quarter and 67.1 in the corresponding quarter of last year.
This surge in business confidence reflects the industry’s buoyant outlook on India’s economic prospects, driven by key factors like policy continuity and post-election economic momentum.
Strong Economic Momentum Post-Elections
India’s economic growth has been steady, despite global uncertainties. The general elections provided a much-needed boost to economic activity, with policy continuity contributing to a more optimistic business environment. The rise in the CII Business Confidence Index indicates that industry players are confident about the future, with the index reaching its highest point in two quarters.
The upcoming festive season also bodes well for strengthening growth prospects. However, CII has cautioned that uncertainties in the global landscape remain and will need to be monitored closely.
Positive Hiring Sentiments Across Sectors
Reflecting the broader economic optimism, the survey highlights a positive outlook on employment opportunities. Almost half of the respondents expect an improvement in hiring within their companies during the second quarter of FY25. This is encouraging news for job seekers and signals a broader economic recovery across sectors.
Surge in Private Investment and Capacity Utilisation
The survey’s respondents cited several key factors that are expected to drive growth in FY25, including an improvement in consumption—especially in rural areas—steady monsoon progress, continued reforms, and fresh private investments. More than 59% of the respondents anticipate a rise in private capital expenditure (capex) in the first half of FY25 compared to the second half of FY24. This uptick in private investment is seen as critical in supporting public capex, which had slowed down in the first quarter due to elections but has shown signs of improvement recently.
Additionally, over half of the respondents expect an increase in sales and new orders during the July-September quarter. This optimism extends to capacity utilisation, with 46% of the survey participants expecting their companies to operate between 75-100% capacity. This is a significant increase compared to the previous quarter, and as the Reserve Bank of India (RBI) suggests, capacity utilisation above 75% is a strong indicator for potential fresh investments.
Challenges on the Horizon: Geopolitical Tensions and External Demand
Despite the positive outlook, some concerns remain. The survey revealed that geopolitical tensions, rising global commodity prices, and slowing external demand are top worries for businesses. These factors could temper growth prospects in the near future and necessitate a vigilant approach to evolving global conditions.
The 128th round of the CII Business Outlook Survey, conducted in September 2024, covered over 200 firms from various sectors and regions. The results paint a picture of cautious optimism, with businesses confident about India’s domestic growth trajectory but aware of potential global headwinds. With the upcoming festive season, improvements in private investment, and robust employment prospects, the outlook for the second half of FY25 appears promising.
As India Inc. navigates these uncertain times, the survey’s findings highlight a resilient business environment that continues to adapt and grow amidst both opportunities and challenges.
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