The MNI India Business Indicator increased to 63.4 in January from 57.8 in December, pushing sentiment 4.6% above the level seen a year earlier.
Business conditions improved considerably among manufacturing companies, while they improved by less for both service and construction sector companies.
Evidence from the survey suggests that business confidence slumped in 2013, but that the worst is now over for business, with sentiment picking up markedly at the start of 2014.
Both New Orders and Production picked u p in January, although weakness in Order Backlogs, which fell to a record low, underlies the degree of spare capacity in the economy.
Firms reported continued inflationary pressures. The Input Prices and Prices Received Indicators remained at a high leve l in January, suggesting that core wholesale price inflation is unlikely to fall rapidly.
Commenting on the latest survey, MNI Indicators’ Chief Economist Philip Uglow said, “It was an encouraging start to the year with business confidence now above the level seen a year ago.”
“In spite of the widening output gap, firms are facing continued inflationary pressures which, when possible, are being passed on further down the supply chain to consumers. This exacerbates the central bank’s policy dilemma of not being able to boost growth given the current high rate of inflation.”
