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India slips to third in business optimism index: report

The report by Grant Thornton shows that India's slip in business index was due to several key factors including slow progress on reforms like the GST bill and the issue of bad loans faced by state-owned banks

By: PTI | New Delhi | Published: July 15, 2016 5:27:53 pm
India, business optimism index, Grant Thornton report, International business report, IBR, profitability expectations, revenue expectations, Indian business, business news Experts believe that once the GST deadlock in the Parliament is cleared India’s ranking on the business optimism scale will improve. (Representational Picture)

After staying on top for two quarters, India slipped to the third position globally on the scale of business optimism because of delays in key reforms like the GST and bad loans facing state-owned banks, says a report.

According to the latest Grant Thornton International Business Report (IBR), India ranked third during the April-June quarter of 2016.

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“Delays in key reforms like GST, non-resolution of tax disputes, banking issues due to NPAs and need for significant recapitalisation of public sector banks are some of biggest concerns of Corporate India that have collectively impacted the business confidence affecting the overall business optimism in the country,” the report said.

Moreover, growth in employment expectations dropped to second position during this period from top rank in the previous quarter (January-March this year), while the optimism further slipped to fourth place in profitability expectations from third.

“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,” Harish HV, Partner – India Leadership team, Grant Thornton India LLP said.

“The passing of GST bill which we hope will happen in the current parliament session should reverse this trend,” he added.

India however, continues to top the chart on expectations of increasing revenue as 96 per cent of the respondents within the survey have voted in favour of increasing revenue.

While the business confidence in India has plummeted, there is a tremendous rise in the optimism for an increase in exports.

According to the survey, 35 per cent of respondents expect a rise in exports compared to 13 per cent in the last quarter. The country, however, continues to rank number 2 in citing regulations and red tape as a constraint on growth for two consecutive quarters.

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