Investment climate will improve: FICCI

Industry is hopeful that the investment climate will improve after the next two quarters, said a survey conducted by the Federation of Indian Chambers of Commerce and Industry ( FICCI) released here on Sunday.

It is expected to improve as industry is buoyant that the recent steps taken by the Cabinet Committee on Investments to expedite project clearances is expected to unlock huge investments in the core sectors of the economy, the survey said.

"RBI support by way of reducing the repo rate by 75 basis points so far this year, and the recent easing of WPI numbers will also give some more space to the central bank to consider further cuts in policy rates. And the slight improvement in IIP and export numbers signal springing of green shoots and it will be crucial to keep nurturing them," the survey said.

The survey drew responses from about 200 companies with a turnover ranging from Rs 10 lakh to Rs 1 lakh crore. The companies belonged to an array of sectors such as textiles, cement, financial services, chemicals, metal and metal products, automobiles, fast moving consumer goods, electrical equipment and machinery and paper and paper products. The survey was conducted in March-April and brought out expectations of the corporates for the April-September period.

The index dropped to 57.4 in the fourth quarter of the 2012-13 survey from 61.2 in the third quarter of the fiscal. The survey also revealed that the respondents were not too optimistic about expectations over the next two quarters.

The survey pointed out a marginal decline in interest rates for both working capital and term loans over the last six months and noted that the monetary transmission mechanism following the reduction in policy rates has been weak.

"Industry has once again emphasized that further cut in lending rates by banks at this juncture is very important to firm up the investment plans in the pipeline," it said.

Nearly 74 per cent of the respondents emphasized the importance of bank support through lower lending rates to support investments and overall growth in the economy.


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