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Brazil, India top business confidence index: Report

Business confidence in Brazil has reached 148 points in March followed by India 143 points

Amid Eurozone crisis and uncertain economic climate, emerging economies of Brazil and India have topped the business confidence index, confirming their role as key drivers of the global economy, says a Regus report.

The global Business Confidence Index is based on a survey of views on revenue, profit trends and expected growth.

According to the latest bi-annual Regus Business Confidence Index (BCI) report which tracks the opinions of over 16,000 business managers and owners from 86 countries, business confidence in Brazil has reached 148 points in March followed by India 143 points. The benchmark average is set at 100 to indicate a neutral outlook.

However, businesses confidence in India has dipped by 2 index points from September 2011 to 143 in March this year, while during the same period Brazil witnessed a rise of 2 points to 148.

At the other extreme is Japan which at 82 points appears to be still suffering from the March 2011 disasters. The global average for the index in the latest report stands at 113, just down one point from the previous report released in September 2011.

For India, the report said, a further mark of optimism is that companies reporting revenue growth increased, reaching 69% compared to 52% six months ago.

However, the companies reporting profit growth stood at 58%, suffering a 1% squeeze.

“Although untouched by the significant setback between March and September 2011 suffered by other global economies, Indian business confidence has now suffered a slight dip.

“In spite of this, the proportion of companies reporting revenue growth has grown although there is a small squeeze in those reporting profits,” Regus regional vice president (South Asia) Madhusudan Thakur said.

“However, in order to grasp the growth opportunities in a sustainable way, businesses globally are still looking to cut overheads without damaging their growth prospects,” he added.

The report noted, “emerging economies such as Brazil (148), India (143) and China (130) remain the highest scorers, Germany also confirms its place as third most confident nation at 132 in spite of a negative variation on September 2011.”

Among other countries, the United States rose 15 points to score a 105, while Mexico and South Africa were up seven points and two points respectively at 109 and 117, while UK was down one point to 113.

The report said revenue growth at global level remains the same at 51% in March 2012 compared to six months ago. Nevertheless, 75% of respondents expect revenue growth in the next six months.

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Assocham urges RBI to cut CRR by at least 0.75%

“The economy is going through a very difficult patch and business confidence has plummeted. New investments have slowed down,” Assocham president Rajkumar Dhoot said

Industry body Assocham urged the RBI to cut cash reserve ratio (CRR) by another 75 basis points and repo rate, the level at which banks borrow from the apex bank, by 50 basis points.

CRR is the amount of funds banks have to necessarily park with the RBI.
“The economy is going through a very difficult patch and business confidence has plummeted. New investments have slowed down,” Assocham president Rajkumar Dhoot said during his interaction with RBI governor D Subbarao ahead of the central bank's monetary policy review scheduled on 17 April 2012.
Dhoot said that the industry particularly manufacturing sector has been affected due to high input and capital costs.

“The RBI’s monetary tightening has added to the low business confidence and affected financial bottomlines, leading to deceleration in investments,” Dhoot said.

On 10 March 2012, the RBI had cut CRR from 5.5% to 4.75%.  There is a need to cut it further by 75 basis points. One basis point is one-hundredth of a percentage point.

While the MSME sector continues to struggle for bank credit, “repo rates too should be reduced by 50 basis points to squeeze cost of borrowings, encourage investments and boost growth,” he added.

An HSBC survey has said that growth of India's manufacturing sector has witnessed decline in March, three months in a row, as output and new order growth weakened.

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