According to the latest Grant Thornton International Business Report, India was ranked second on the optimism index during the third quarter. India improved its ranking by one spot in a global index of business optimism, with policy reforms and Goods and Services tax (GST) expected to become a reality soon.
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About the Optimism Index,
According to the Grant Thornton International Business Report (IBR) – a quarterly global survey of 2,580 business leaders across 36 economies, 89 percent of the businesses have shown confidence in the stable government and expect economic recovery in the last quarter of 2015. India was followed by Ireland and Philippines with 88 and 84 percent respectively.
- The optimism, however, suffered a decline in the last few quarters due to slow growth of core sectors. The level of optimism has been continuously increasing with the second quarter witnessing 85 percent businesses expecting economic recovery. This was followed by 87 percent businesses indicating economic recovery in the third quarter.
- The stability of the Indian economy can also be gauged from the fact that India tops the chart on expectations of an increasing revenue (92 percent), selling prices (73 percent) and profitability (76 percent).
- While there is expectation of a recovery, corporate India continues to cite regulations and red tape as a constraint on growth with 74 percent of the respondents to the survey suggesting bureaucratic hurdle continues to be an impediment in growth.
- Here too India ranks highest in the IBR survey. This highlights the need for the government to remove regulatory bottlenecks and bring in place a mechanism for faster approvals.
- The IBR also shows that 49% Indian businesses plan to ramp up investment in the new buildings and 52% plans to invest in plants & machinery in 2016.
- While 51% businesses expect an increase in R&D activities in the coming year, only 28% businesses are expecting country’s exports to grow.
- Indian businesses also plan to be on a hiring spree in the coming year as 68% businesses expect an increase in employment – ranking #2 in the survey, lack of skilled labour and finance continues to be top two concerns for Indian businesses.
- The geopolitical tensions and the structural stress building up in the developed and emerging economies would continue to present both opportunities and the inherent threats.
- Globally, business optimism heading into 2016 stands at net 36% – only slightly down from Q3 2015 and just above the 35% recorded a year ago.
- For the first time since the financial crisis, it is the EU which provides the bedrock of stability. Net 38% of EU businesses are optimistic about their economy over the next 12 months, exactly the same as in Q3 and Q1.
- It is noted that the US has seen optimism fall from 74% to 50% in Q4, the biggest fall of any of the 36 countries 2016 also looks much brighter for businesses in Asia Pacific and Latin America as both report big quarterly increases in optimism.
