Global Economy Indian Economy
According to a study conducted by the Confederation of Indian Industries (CII), corporate India's business confidence for the current quarter has been lowered due to inflationary pressures and falling consumer demand. The Business Outlook Survey for October-December 2010 indicated that India Inc.'s business confidence has shrunk 1.4 points to 66.2 compared with 67.6 for the April-September 2010 period.
Factors such as availability of labor and high interest costs are also causing anxiety for corporate India.
Based on current situations and overall expectations of performance going forward, the deterioration in business outlook is largely the result of a sharper decline in the Expectation Index compared to the Current Situation Index that has moderated only marginally.
According to the survey, 70% of the respondents expect average inflation for 2010-11 to be above 6%.
The apex bank RBI has raised short term rates five times this year in order to put a curb on demand and check consumer spending.
56% of the participants expect the volume of outward shipments to increase in light of the likelihood of exports crossing the $200 billion target for 2010-11.