India slips in business optimismn
Redtape, lack of skilled workers, credit crunch cited as reasons: Study.
MUMBAI: 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 according to Grant Thornton’s International Business Report (IBR), a quarterly global business survey.
India has been topping the chart since the new government came into power in 2014. However, the confidence has shaken since Q3 2017 due to weakness in Indian rupee and surge in oil prices.
“The reversal in sentiment amongst mid-sized business in India in the last three quarters is startling and I hope policy makers will 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,” said Vishesh C Chandiok, CEO, Grant Thornton India LLP.
Though Indian businesses have shown interest in investing in new buildings over the last couple of years, they haven’t given much impetus to investment in plant and machinery. India was most optimistic about investment in plant and machinery in Q1 2015 and ranked third among the surveyed countries.
However, India’s ranking has dropped to 31st and 30th positions respectively in the last two quarters.
When it comes to investment in research and development, India’s ranking has been in the range of 5-6th position since 2014. However, this parameter witnessed a drastic fall in Q4 2017 and Q1 2018 sinking to 24th position.
Indian businesses have cited regulations and red tape, availability of skilled workforce, lack of ICT infrastructure and shortage of finance as the biggest growth constraints.
Even after India’s significant jump in World Bank’s ease of doing business ranking, the country still continues to rank first and second in quoting these reasons as the key hurdles for growth.