India’s business sentiment lowest since June 2016

Owing to slowing economy, government policies and water shortage, business sentiment in India dropped to its lowest level since June’16 according to the IHS Markit India Business Outlook. The net balance of private sector companies that were foreseeing output growth dropped from 18% in February to 15% in June. Other concerns include rise in the prices for imported materials due to potential rupee depreciation, lack of skilled labour, likely tax hikes, financial difficulties and customers increasingly demanding discounts. The tri-annual report predicted lesser profits, subdued hiring plans and relatively muted capital expenditure. However, there are hopes of demand pick up, pro-business government policies and a better financial flow improving profitability.