by Pankaj Yadav
NEW DELHI, Nov. 12 (Xinhua) -- If the findings of recent surveys and the official data on industrial output released by the government of India on Monday are to be believed, the overall business confidence has touched the lowest in the country over past several years.
The Index of industrial output released by the Ministry of Statistics and Program Implementation on Monday showed that the industrial output had shrunk for the second straight month in September and stood at 123.3 points, which was 4.3 percent lower as compared to corresponding month last year.
Described as the lowest in past seven years, the shrunk factory output is most likely to impact the Gross Domestic Product (GDP) growth which is already said to be at a six year low, said media reports.
The official data revealed that all components of industrial outputs, like mining, manufacturing, and electricity, decreased during the month, hinting towards a sluggish economy.
The official data also showed that the country's electricity demand fell 13.2 percent in October compared to the same month last year, thereby posting its steepest monthly decline in over 12 years.
The shrinkage in electricity generation has been attributed to weaker demand from industry as production fell due to shrinkage in demand in various sectors. English daily Hindustan Times quoted economist Aditi Nayar as saying "The sharp contraction in electricity generation in October is likely to have been led by multiple factors, including weaker demand from industry following curtailed production schedules in some sectors as well as lower domestic demand and farm offtake related to higher than normal rainfall."
Meanwhile, two surveys done by different organisations also showed business sentiment dipping in the country in October, owing to several reasons, including unresponsive demand, subdued global conditions, unfavourable exchange rates, infrastructure issues, weak automobile sector.
One survey done by global firm "IHS Markit" revealed that the business confidence among India's private sector companies dipped to its lowest levels and stood at +14 percent in October, down from +15 percent in June. The business confidence was down in sentiment towards industrial output, profitability and capital spending, it found.
According to the survey findings, several threats marred the business outlook, including regulation, fierce competition, unresponsive demand, subdued global conditions, unfavourable exchange rates, infrastructure issues, weak automobile sector, and environmental concerns.
It also found that Indian companies had lowered their hiring, capital spending and Research and Development intentions in line with predictions of softer growth in the next one year.
IHS Markit's survey is carried out thrice a year, in February, June and October.
Another survey conducted by India's ace think-tank and non-profit organisation National Council of Applied Economic Research (NCAER) also gathered that business confidence of Indian companies dropped to the lowest during August-September-October.
According to this survey, done every quarter, the Business Confidence Index (BCI) declined 15.3 percent to 103.1 points from the preceding three months.
The NCAER survey was quoted as saying "The numbers suggest a deep and all pervasive worsening of business sentiments."
The country's central bank, the Reserve Bank of India (RBI), had also said in its monetary policy released last month that consumer confidence had also dipped to a six year low during September as sentiment around employment, income, and discretionary spending declined.
Meanwhile, the automobile sector showed some revival even as sales of cars and sports utility vehicles (SUVs) broke an 11-month string of declines and posted an increase of 0.3 percent. The miniscule rise was attributed to the recent festive season, deep discounts and new models launched in the Indian market over the past few months.
Data released by the Society of Indian Automobile Manufacturers (SIAM) showed that sales of passenger vehicles stood at 285,000 in October, compared to 284,000 sold in the same month last year.
However, sales of two-wheelers declined in October by 14 percent to 1.76 million from 2.05 million units sold in the same month last year.
