With business sentiment at the weakest in four years, India slipped to the 6th position globally in the business optimism index for the first quarter of this year, says a survey. Business optimism is however at an all-time high globally with the index at net 61 per cent, the highest figure recorded in 15 years of research, as per Grant Thornton’s business survey released on Wednesday.
Indian businesses have been citing regulations and red tape, availability of skilled workforce, lack of ICT infrastructure and the shortage of finance as the biggest growth constraints.
Noting that business sentiment in India has been the weakest since 2014 in the first quarter, the advisory firm said the confidence has been shaken since the third quarter of 2017 with weakening currency and a surge in oil prices.
“While entering the last year of the current regime, the business optimism in India has deteriorated with the country ranking 6th globally on the optimism index in the first quarter of 2018… India has been topping the chart since the new government came into power in 2014,” the report said.
With a score of 89, India is at the sixth place in the index. The top five nations are Austria, Finland, Indonesia, the Netherlands and the US. The conclusions are based on a quarterly global business survey of 2,500 businesses in 37 economies. With regard to India, Grant Thornton said the underlying pessimism is reflected in other parameters as well including revenue, selling prices, profitability, employment and exports expectations.
Even after India’s significant jump in World Bank’s ease of doing business ranking, the country still continues to rank 1st or 2nd in quoting these reasons as the key hurdles for growth, it noted.
Grant Thornton India LLP CEO Vishesh C Chandiok said the reversal in sentiment amongst mid-sized business in India in the last three quarters is startling and hoped that policymakers would sit up and take note. “With oil climbing, and India firmly in an election year, we ought to brace for a volatile economic environment in the days ahead. Export-oriented businesses should see better days, finally,” he added.