India Inc Shining


The business environment in India is so good that it is virtually shining with more and more business confidence. The business climate in India has improved further. According to a survey conducted by Dun & Bradstreet recently the business optimum index for the quarter ending December 2006 recorded an increase of 14% to 177.1 as compared to the ending of the last quarter. However the index declined as compared to the last year which was 186.9 points.

According to the survey all the six optimism indices namely,

· Volume of Sales
· Net Profits
· Selling Prices
· New orders
· Inventory levels
· Recruitment of employees

All the above have shown improvement over the previous quarter level.

The factors that seem to have contributed to the rise in confidence levels are decline in global oil prices, Inflow of foreign direct investments, and funds from foreign institutional investors and encouraging statistics for the first five months of the current fiscal.

Only significant external developments could adversely impact business confidence in the country. Domestic factors however look stable in the short run.

Demand conditions are expected to remain strong in the October-December quarter. The survey revealed that 93% of the respondents are expecting the sales volumes to increase during the quarter which is 9% higher than the last quarter. The expectations with the net profits are also higher as indicated by 92% of the respondents and only about 2% expect decline in profits.

It is also expected that the selling prices may go up as indicated by the optimum index of selling prices for the quarter Oct-Dec at 40%.
For job seekers also the environment seems to be improving. According to the survey about 66% of the respondents expect an increase in the size of their staff. The resultant optimism index for the employees, stand at 64% for the quarter.

The business community appears to be highly optimistic with regards to expectations over order book positions. The rise in confidence clearly indicates that the present high growth is expected to continue in the short term at least. In the international arena also Indian companies are well accepted which is evident from the fact that domestic companies are able to close takeover bids in the foreign countries.