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Domestic Trends

 CII Business  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
 Confidence  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
 Index zooms  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
 to a                   >7.0�%   <5.5�%      5.5�% to                        (% of Respondents)
                         (% of Respondents)
                                  3%
                                                                                Can't say
                        16%
                                                                                  15%
                                              6.0%
 three-quarter                                16%                    RBI will start
                                                                     cutting rates
                                                                        11%
 high in          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%
 Q2 FY24  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
 T  he robust macro   results of the survey which   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
 fundamentals of the
 established that nearly half of
 Indian economy despite the   the respondents (52 per cent)   beneficial to tame inflationary   that capacity utilisation in their   investments in the economy.   and notably, 54 per cent of
 global headwinds got mirrored   anticipate an improvement in   pressures, followed by open   company would range between   overall firms belonged to
                                                                        th
 in an uptick of the CII Business   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
 Confidence Index (CII-BCI) to   of the current fiscal.  of the respondents).   It is heartening to note that in   Business Outlook Survey   cohort.
 a three-quarter high of 67.1 in
 the Jul-Sep quarter FY24 as   The survey results highlighted   Capacity Utilization (% of Respondents)
 compared to a reading of 66.1   Trajectory of CII Business Confidence Index  that about 55 per cent of the
 in the previous quarter and   respondents are of the view that               48  53
 62.2 in the same quarter last   67.6  67.1  improving ease of doing
        business along with
 year. The reading reaffirms the   66.1  government’s thrust on capital   36  31
 sustained positive momentum   spending, especially in
 seen in host of high frequency   64.0  infrastructure related sectors
 indicators such as GST   will help further crowd-in   11                                    12
 collection, air & rail passenger   62.2  private investments. This will   4              5
 traffic, PMIs among others in   stimulate growth in other
 the second quarter. The   sectors of the economy through   Below 50%  50-75%  75-100%  Above 100%
 buoyancy seen in rural   its multiplier effect.        Actual Q1 FY24 (Apr-Jun 2023)  Expected Q2 FY24 (Jul-Sep 2023)
 demand in the recent period,   Q2FY23  Q3FY23  Q4FY23  Q1FY24  Q2FY24
 too, was mirrored by the



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 QUARTERLY JOURNAL OF ECONOMICS
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 SEPTEMBER 2023                                                                                      SEPTEMBER 2023
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