India slips to 3rd rank in business optimism: Report

The Dollar Business Bureau

After topping the list for two quarters, India slid to the 3rd rank globally on the basis of business optimism due to delays in major reforms such as the Goods and Services Tax (GST) and bad loans facing state-owned banks, according to the International Business Report.

India slipped to the third position during the quarter of April-June 2016, revealed the report by Grant Thornton.

The delays in major reforms such as GST, banking issues due to Non-Performing Assets (NPAs), non-resolution of tax rows, and the need for considerable recapitalisation of state-run banks are some of largest concerns for Corporate India that have together affected the business confidence leading to the total business optimism in India,” the IBR report said.

Furthermore, the growth in the expectations for employment declined to second rank during the given quarter from the top position in the last quarter of January-March this year, where the optimism in profitability expectations slipped further to fourth rank from third.

Harish HV, Partner – India Leadership team, Grant Thornton India LLP said, “This is a clear signal that while there is optimism in the market and great business opportunity in India, the issue that is bothering investors is the slow progress on key reforms, simplification of tedious government processes and regulatory uncertainties which is impacting India’s ranking.”

“The clearing of the GST bill, which we are hoping to be passed in the current monsoon session of parliament, would reverse this downward trend,” he added.

However, India remains on top of the list on the expectations of growing revenues as 96 percent of the survey respondents have favoured the increase in revenue.

Though the business confidence in the country has dropped, there is a huge increase in the optimism for a rise in exports.

As per the survey, about 35 percent of participants hope for an increase in exports against the 13 percent in the previous quarter.