Page 18 - CII Artha Magazine

Domestic Trends
CII Business
Confidence
Index zooms
to a
three-quarter
high in
Q2 FY24
T he robust macro results of the survey which
fundamentals of the
established that nearly half of
Indian economy despite the the respondents (52 per cent)
global headwinds got mirrored
in an uptick of the CII Business
Confidence Index (CII-BCI) to
a three-quarter high of 67.1 in
the Jul-Sep quarter FY24 as
compared to a reading of 66.1
in the previous quarter and
62.2 in the same quarter last
year. The reading reaffirms the
sustained positive momentum
seen in host of high frequency
indicators such as GST
collection, air & rail passenger
traffic, PMIs among others in
the second quarter. The
buoyancy seen in rural
demand in the recent period,
too, was mirrored by the
18 ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY
QUARTERLY JOURNAL OF ECONOMICS
SEPTEMBER 2023
Majority of the respondents (66 results, however, revealed that 54 of the respondents (58 per respondents expect the
per cent) feel that the Indian
cent) anticipate that RBI will
current phase of acceleration
per cent of the respondents
stick with a pause on the
in inflation to be a transitory
indicated muted global growth
economy will grow in the range
and high inflation/input costs as
of 6.0-7.0 per cent in FY24, with
repo rate in the second half
one, which will normalize
36 per cent of them expecting the biggest business concerns in of the current fiscal to let the going forward.
the current fiscal.
lagged impact of the rate
growth to come between 6.0-6.5
hikes effected so far to work
per cent, broadly in line with the
through the system. This
forecast of RBI and other
On inflation which has emerged
multilateral agencies. The survey as a risk to growth, more than half implies that the survey
Expected GDP Growth in FY24
Expectations of Policy Rate in H2 FY24
>7.0�% <5.5�% 5.5�% to (% of Respondents)
(% of Respondents)
3%
Can't say
16%
15%
6.0%
16% RBI will start
cutting rates
11%
6.5�% to 6.0�% to repo rate, but by a RBI will stick
with a pause
RBI will hike
7.0%
on repo rate
58%
29%
lower magnitude
6.5%
16%
36%
To tame the rising inflationary Improving domestic demand in the last two surveys too, was conducted during
impulses, the government in the
had expected their capacity
the participation of around
sentiments of the companies.
recent months has announced a the economy has bolstered the majority of the respondents September 2023 and saw
slew of supply-side measures. Two-third of the respondents utilisation to be in range of 200 firms of varying sizes
Notably, out of the key expect sales and new orders to 75-100 per cent, which is an and across all industry
measures imposed, one-third of increase in Q2FY24 by a higher encouraging sign as capacity sectors and regions of the
the survey respondents noted clip than in the previous quarter. utilisation needs to be country. Majority of the
that imposing export duties on Mirroring this, half of the maintained between 75-80 respondent firms were from
the manufacturing sector
per cent to fuel fresh
commodities will be the most
respondents (53 per cent) feel
beneficial to tame inflationary that capacity utilisation in their investments in the economy. and notably, 54 per cent of
anticipate an improvement in pressures, followed by open company would range between overall firms belonged to
th
rural demand in the first half market operations (26 per cent 75-100 per cent during Q2FY24. The 124 round of the CII the large & medium size
of the current fiscal. of the respondents). It is heartening to note that in Business Outlook Survey cohort.
The survey results highlighted Capacity Utilization (% of Respondents)
Trajectory of CII Business Confidence Index that about 55 per cent of the
respondents are of the view that 48 53
67.6 67.1 improving ease of doing
business along with
66.1 government’s thrust on capital 36 31
spending, especially in
64.0 infrastructure related sectors
will help further crowd-in 11 12
62.2 private investments. This will 4 5
stimulate growth in other
sectors of the economy through Below 50% 50-75% 75-100% Above 100%
its multiplier effect. Actual Q1 FY24 (Apr-Jun 2023) Expected Q2 FY24 (Jul-Sep 2023)
Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q2FY24
ANALYSIS, RESEARCH, THOUGHT LEADERSHIP & ADVOCACY 19
QUARTERLY JOURNAL OF ECONOMICS
SEPTEMBER 2023