India Inc's business confidence slips

The business confidence of India Inc has slipped due to short-term economic challenges like European debt turmoil and the US slowdown, a survey has said.

According to the Regus business confidence survey, Indian businesses' confidence index decreased 2 points (from 143 to 141) since April 2012.

The business confidence among India Inc has stalled as Asia's third largest economy is battling short-term economic challenges like European debt turmoil and the US slowdown, the survey said.

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India, however, fared better than China, where confidence levels have dropped by twenty points from 130 to 110 since April 2012.

"It's clear that there's been a stagnation in business confidence, accompanied by significant falls in some rapidly developing economies since our last BCI report in April," Regus South Asia senior vice president Madhusudan Thakur said, adding that "slowing trade with Europe and Western economies, combined with a host of national factors, is taking its toll.

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Despite the fall, levels of business confidence in rapidly growing economies still remains well ahead of mature economies -- yet this setback should be taken as a 'warning flag' for businesses across the world, the survey added.

The survey further noted that the proportion of Indian companies reporting revenue increases slipped slightly to 67 per cent compared to 69 per cent in April 2012, while profits increased from 58 per cent to 61 per cent.

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Moreover, less than 38 per cent of Indian respondents reported they were satisfied with government's support strategies for business.

In India, the business confidence Index rating is lower for small businesses (135) than for large firms (151), the survey which is based on the views of more than 24,000 senior business people from 92 countries said.

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Access to affordable credit and cash-flow management were the the biggest concerns for small businesses in India, highlighting the need for flexible, pay-as-you go business services allowing businesses to remain flexible and agile, the report said.

Around 45 per cent of respondents, reported that one of the major burdens during the downturn has been inflexible property leases.

Flexible services allow businesses to be more agile and free-up cash for investment without relying on credit at a time when it is so difficult to secure.