Global business sentiment has crashed to zero in the fourth quarter of calendar 2011, but Indian businesses still hold a broadly optimistic outlook of how 2012 will play out.
That was one of the key findings of a survey of 400 Indian businesses over a range of industry sectors, ranging from small to medium in size.
The survey is a part of the Grant Thornton International Business Report (IBR) 2011. The IBR is a quarterly survey of 2,800 senior executives in privately held and listed businesses across the world.
The survey is a part of the Grant Thornton International Business Report (IBR) 2011. AFP
According to the latest findings, global business optimism dipped again in the fourth quarter. However, business sentiment in India remained stable at 58 percent, well above the level for the Asia Pacific (23 percent) and the global average of zero percent. The sovereign debt crisis is weighing heavily on businesses confidence in Europe; business optimism across the European Union dropped to -17 percent in the fourth quarter.
However confidence in the BRIC economies ticked upwards to 34 percent. Globally, business sentiment dropped to 0 percent in Q4, down further from 3 percent in Q3, the IBR found.
But there are some areas where Indian businesses are a worried lot, compared with their global peers. The availability of skilled workforce is one major area. Indian businesses cited a lack of skilled workers as a major growth constraint, with 51percent saying that was a huge problem, well above the APAC (excluding Japan) average of 38 percent.
The cost of finance (49 percent) and regulations/red tape (47percent) are both much more significant constraints on Indian businesses compared with peers throughout the region.
On a few other parameters too, India scores well ahead of the rest of the world, which should cheer up those feeling pessimistic about the Indian economy.
The IBR found that as much as 70 percent of Indian businesses expected to increase staffing in 2011, compared to just 28percent globally. Businesses in India have been consistently faring better than their global counterparts on this count, since 2002.
The revenue expectations of Indian businesses have also risen by nine percentage points — up to 83percent — to 2008 levels. However, this is again higher than the global average of just 50 percent.
What do the Indian businesses expect on the profitability front, vis-à-vis their global counterparts? The survey found that across the year, 69 percent of Indian businesses expected to see profits rise, compared to 65 percent in 2010. This represents a 10 percent rise since 2009, but still remains below pre-recession levels. Globally, only 39 percent of businesses expected to see profits rise, up from 29 percent in 2010.
In India, lenders get a big thumbs-up from businesses. A majority of businesses in India are happy with the level of support provided by lenders with 86 percent saying lenders are supportive of their business. This is much better than the APAC figure of just 67percent.
Only 3 percent of businesses in India believe that lenders are unsupportive of their business.
More than half the businesses surveyed sometimes or often interact with the government (59percent), but that interaction isn’t too pleasant.
Over half of businesses in India (57 percent) feel it is too difficult to deal with government, with 14 percent stating that it is “much too difficult”.
Indian businesses are also split as to the areas in which government should prioritise reforms. While government processes rank most highly (30 percent), opinion is divided on policy & legal, governance and corruption, people and technology reform (all are around 16 percent).