Business Optimism Index Current Affairs - 2019
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India was ranked 6th on Global Optimism Index released as part of Grant Thornton’s International Business Report (IBR) in the first quarter of 2018. The report was prepared based on the results of a survey of 2,500 businesses in 37 economies.
The top five nations are Austria, Finland, Indonesia, the Netherlands and US. India with a score of 89 was ranked at the sixth place in the index. India had topped the chart for four years, but business optimism in India deteriorated while entering the last year of the current Government led by Prime Minister Narendra Modi.
Underlying pessimism in India’s Business Optimism is reflected in other parameters as well including revenue, selling prices, profitability, employment and exports expectations. Indian businesses have been citing regulations and red tape, availability of skilled workforce, lack of ICT infrastructure and shortage of finance as biggest growth constraints. Even aftersignificant jump in World Bank’s Ease of Doing Business ranking, India still continues to rank first or second in quoting these reasons as the key hurdles for growth.
India has slipped to 7th position in ‘business optimism’ index in September-November quarter period from earlier 2nd slot in the previous July-September quater. The fall in rank clearly shows clear signs of lag in the economy.
The index was released as part of Grant Thornton’s International Business Report (IBR). The IBR provides insight into the views and expectations of more than 10,000 businesses per year across 36 economies.
In September-November quarter, the index was topped by Indonesia, followed by Finland (2nd), Netherlands (3rd), Philippines (4th), Austria (5th) and Nigeria (6th).
Globally, overall position for business optimism remains relatively high at 49% in September quarter. It was down by 2 pps in June quarter, and follows five consecutive quarterly increases in business sentiment.
Indian businesses have expressed low confidence over revenue expectations in next 12 months. They also saw a drastic fall in confidence for profitability with 54% showing optimism as against 69% in the last quarter.
Moreover, other parameters like expectations of increase in selling prices and exports also have suffered fall in optimism which shows clear signs of lag in the economy which caused the drop in ratings.
However, Government actions and reforms coupled with significant jump in Ease of Doing Business Rankings may bring back optimism in Indian Business in next few quarters. Optimism remained intact in areas of investment in plant and machinery and Research & Development (R&D).
Regulations and red tape and lack of ICT infrastructure are biggest growth constraints mentioned in optimism rankings. Indian businesses also identified shortage of finance and lack of skilled workforce as reasons for lack of optimism. Indian businesses are still optimistic about increase in employment as 54% respondents expressed need to increase hiring in next 1 year, three- point rise from June quarter.