US, Europe conditions worry India : Assocham
Hyderabad, Oct 27 (INN): India's growth story continues to ride on strong domestic demand but worrying signs are emerging due to Europe's debt crisis and a faltering US recovery, according to a study that analysed second quarter results of 87 companies across various sectors.
High interest rates have pushed up raw material costs. The demand for automotive components has declined and delays in government clearances continue to hold back fresh investments.
Though exports to Europe and the United States have fallen, overall exports continue to be on upswing, the Eco Pulse study conducted by Associated Chambers of Commerce and Industry (Assocham).
'Second quarterly results suggest healthy state of affairs currently for Indian corporates as emerging economies led by China and India continue to lead the world economic recovery. But fears of global financial contagion pulling down growth in developing countries are mounting. Global investors are taking flight for safety, causing anxiety in the markets,' the study said.
In the financial sector, there are strong disbursements despite higher interest rates matched with healthy growth in other incomes.
In the IT and ITes sector, there are no visible signs yet of immediate fall in business to Europe and the United States.
Order books are healthy but prices have fallen or remain unchanged. Certain macroeconomic concerns related to Europe have though crept into minds of several corporates.
Fast moving consumer goods (FMCG) firms are unable to pass on higher input costs to customers due to competitive market conditions, said the study. Automobiles, real estate and other industries could hold on to profits, though the margins are declining, the study said.
Power companies have declared subdued results as production costs have gone up but revised tariffs are difficult to put into effect.
Depreciating value of Indian rupee has imposed higher costs of imported intermediates and raised doubts among foreign investors about dollar returns on their investments, the study said.
News Posted: 27 October, 2011
|
