India’s small
businesses confidence continued to remain upbeat about their growth prospects
buoyed by gains in the manufacturing sector in the January-March quarter.
According to a
statement by the Press Information Bureau, the CriSidEx Index, which measures
the business sentiment among micro and small enterprises, rose to 121 in the
January-March quarter, reflecting a growing optimism among these firms over
their business prospects. That compares with 107 in the three months ended
December-its first reading that had indicated a mildly positive
sentiment.
The CriSidEx
index, developed jointly by Crisil and SIDBI, is based on a diffusion index of
eight parameters -five manufacturing and three services -that have
equal weights. It measures MSE business sentiment on a scale of 0 to 200.
India’s small
businesses sentiment has started improving gradually after the jolt of
demonetisation and then the implementation of Goods and Services Tax.
Particularly the ones in the informal economy as the cash ban hurt consumption
and then GST increased compliance burden.
Within
manufacturing, chemicals, auto components, engineering and capital
goods-related-small enterprises reported a better January-March period and are
the most optimistic about the ongoing quarter. Segments with a significant
presence in unorganised enterprises such as leather and leather goods, and gems
and jewellery remained subdued.
Among
commercial services and supplies providers, 21 per cent reported a subdued
quarter, 48 per cent reported a satisfactory one, and 31 per cent reported a
good quarter. The corresponding figures for the construction/real estate
segments are 15 per cent, 62 per cent and 23 per cent, respectively.
Information
technology and IT-enabled services, traders and healthcare providers had a
healthy March quarter and are expected to continue doing well, but that is not
so with logistics, construction and real estate-based businesses. The services
sector remains optimistic, with most industries having only a single-digit
share of respondents expecting a turn for the worse.
Unorganised
MSEs also reported a slight improvement in performance. About 13 per cent of
them, with less than 10 employees, reported a bad survey quarter compared with
22 per cent in October-December.
Meanwhile,
lenders hold a neutral view for next quarter, with 9 out of 10 saying the
overall business situation will be satisfactory.
As
many as 7 out of 10 lenders did not find any change in the situation of MSE
non-performing assets (NPA) accounts in survey quarter and majority of lenders
do not expect an increase in NPA accounts in next quarter.
As far as new
jobs are concerned, the services and manufacturing sectors are equally
optimistic on employment with 15 per cent of respondents in each stating they
added employees.
Latin Manharlal Group
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