The payload of factors that weigh business sentiment is heavier every day. No sooner were they cleared, than Fringe Benefit Tax (FBT) and Value Added Tax (VAT) have joined oil prices, agricultural output and the rupee’s escalating value in smudging enthusiasm across corporate sectors.Confidence that the next six months will bring only good news slipped from 75.6 in December to 71.6 in March, across heavy industry, auto, pharmaceutical, metal, construction, cement, petrochemical and other sectors says a survey of 426 firms by the Federation of Indian Chambers of Commerce and Industry (Ficci).The Business Confidence Survey shows the confidence index dip significantly despite optimism on the investment, export and employment front for the coming six months. This, says Ficci, will bring the overall business confidence index in Q4 2004-05 back to levels reported in the second quarter of the fiscal. Exports will go up, said 58 per cent of the companies surveyed, while 32 per cent said current export levels will sustain despite the rupee. ‘‘This makes for good sentiment and performance in 80 per cent of the industry,’’ said Ficci Director-General Amit Mitra.The export index stands at 48, improving 7 points over the survey’s last round. The investment index has risen too, suggesting a surge in activity in coming quarters. Only 9 per cent expect a decline, keeping the index afloat at 42, up two points from the 40 in December.Nearly 70 per cent firms are operating at above 75 per cent of their present capacity, say the findings, indicating capacity expansion is very much on the cards too. Ficci’s employment index has also zoomed 10 percentage points, with 30 per cent firms saying they will increase headcount (25 per cent in December) and firms likely to downsize in the next six months down 5 per cent. Ficci’s study concludes there is little to fear but the ‘‘psychological impact’’ of the FBT and dismay that the government failed to introduce a uniform VAT simultaneously across all States.
