The Confederation of Indian Industry?s Business Confidence Index (CII-BCI) survey has indicated a boost in private investments due to increased domestic demand and high capacity utilisation. According to the survey conducted in September, two-thirds of the respondents expect a rise in sales and new orders in the second quarter of FY24, with 53% anticipating 75-100% capacity utilisation in their companies during the September quarter. Approximately 67% of respondents foresee a sequential increase in sales, while 64% expect a rise in new orders for the same period.

CII director-general Chandrajit Banerjee noted that maintaining capacity utilisation between 75-80% is crucial for encouraging fresh investments in the economy. He expressed optimism about the improvement in rural demand, emphasising its significance for inclusive economic growth.

Chief Economic Adviser V Anantha Nageswaran highlighted the resurgence of private sector capital formation supported by government expenditure. However, he cautioned about external risks such as slowing global growth and rising oil prices. The government's emphasis on public spending, with a record capex budget of Rs 10 trillion for FY24, aims to stimulate growth, create employment, and open up investment opportunities.

The CII-BCI index reached a nine-month high in the September quarter due to robust domestic demand, sustained government spending, and corporate and bank balance sheet deleveraging. High-frequency indicators like GST collections and air and rail passenger traffic also maintained positive momentum during this period.

The survey results are significant given the upcoming state and general elections, where economic factors like inflation and employment can influence voter preferences. Despite challenges like inflation and sluggish rural demand, the Indian economy is projected to grow between 6-7% in FY24, according to respondents. To combat inflation, the government implemented supply-side measures, including releasing cereal stocks, managing pulse imports and exports, and restricting rice and sugar exports. Survey respondents highlighted the effectiveness of measures like imposing export duties and open market operations, with 55% indicating an improvement in the ease of doing business. These efforts, coupled with increased capital spending, are expected to encourage private investments and stimulate growth across various sectors.

Source: Mint