The economy grew 6.9 per cent during 2004-05 despite various shocks such as high oil prices. This has also found its way into the business confidence index, which grew half a percentage point from the January level to 143.1 in April 2005, the National Council of Applied Economic Research said in its quarterly review.
The increasing efficiency and competitiveness of domestic producers, liberalised trade and deregulated interest rate regime have contributed significantly to the current macro economic stability and industrial growth, NCAER said.
However, while overall business confidence has remained on course, sales and production growth projection for the next six months does not reflect this.
The proportion of firms expecting sales to rise has gone down by 3.8 per cent compared to the previous round in January.
This could be attributed to the fact that fewer firms in this round reported order books of longer than three months for the manufacturing sector. Likewise, production growth during the next six months is expected to be subdued, NCAER said.
Strangely, prospects of exports as against prospects of sales and production for the next six months are quite upbeat.
The proportion of firms expecting their exports to go up has gone up by 2.9 per cent, NCAER said, adding even the outlook on pre tax profits is bright as the proportion of firms expecting profits to go up has risen by 5.9 per cent.