Rising inflation and expectations of yet another hike in policy rates by the Reserve Bank has dampened the business confidence of Indian corporates for the April-June quarter,a survey said. According to CII's quarterly Business Outlook survey,the Business Confidence Index (BCI) for April-June,2011 declined to 62.5 from 66.7 in the previous quarter (January-March). It said the top three business concerns are high raw material cost,infrastructural shortages and high interest rates. "Expectations appear to be relatively bleak due to uncertainties about international commodity prices,especially oil,expectations about further tightening of monetary policy and inflation which has been persistently high," it said. The headline inflation in the country stood at 8.66 per cent in April. Inflation has been above the 8 per cent mark since January 2010,much above the government's comfort zone of around 5 per cent. The RBI has increased its key policy rates nine times since March last year to curb inflation. Experts have said the central bank is likely to go for further rate hike during its next mid-quarterly review in June. Majority of the 300 companies participated in the survey foresaw an increase in the company's spending on capacity expansion during April-June period as compared to the previous quarter. Participants also said that there might be a slow down in consumer demand. Talking about the economic growth,CII President B Muthuraman yesterday said that the country's growth would slow down this year because of high inflation,rising oil prices and commodity prices. "I expect the growth this year will slow down,investments are slowing down,margins are getting squeezed over last six months. So we must expect slowing down of economy compared to last year. We will probably have growth in the region of 8 to 8.5 per cent this fiscal," he said. About 33 per cent said that India's economy is expected to grow in the range of 8-8.5 per cent this fiscal. About 50 per cent expects inflation for 2011-12 to be above 8 per cent,the survey added.
