India Inc is hopeful of a faster growth in third quarter as impact of demonetisation fades and GST starts settling down, according to a CII survey.
The CII Business Confidence index (BCI) has climbed up to the level of 59.7 during October-December 2017 compared to 58.3 in the previous quarter, reflecting an improvement in perception regarding overall economic conditions.
“Though the index had recorded a fall in the previous quarter, sliding to the level of 58.3 in July-September 2017 from 64.4 in April-June 2017, the recovery recorded in this quarter (October-December 2017) is indicative of the improvement in the business environment, post the implementation of GST,” said CII.
It said significant improvement in the index this quarter has been led by a sharp improvement in the Expectation Index, as compared to the Current Situation Index, as firms appeared particularly upbeat about expectations in their sectors.
CII said that around 50 per cent expect GDP growth to exceed 6.5 per cent in FY18. Of these, a large share of 40 per cent anticipate GDP growth to range between 6.5-7 per cent in FY18.
This is closely in line with the growth forecast by the central bank and various other international organisations like WB, IMF and ADB.
Given the pick-up in economic activity, with GDP growth improving to 6.3 per cent in second quarter of FY18, it is expected that the economic recovery will continue in the coming quarters, said CII.
It said that a majority of the respondents feel that GST payment will become hassle free by the first quarter of FY19, around one year after the implementation of the reform.
Among the respondents, 28 per cent feel that the implementation issues would end by Q1 FY19 while 21 per cent expect it to end by the last quarter of FY18.
“The survey underscores the perception that the economy is on a sustainable recovery path, with the many government interventions having an impact on the ground. The climb in business confidence underpins the hope that the upward trend one is seeing on macro figures would be sustained,” said Chandrajit Banerjee, director general, CII.