India's business confidence slips in Q2 amid economic uncertainty

Global business confidence stayed constant, but slipped marginally in India in the April-June period of this year amid economic uncertainty, says a survey.

According to audit and advisory firm Grant Thornton's International Business Report (IBR), while global business optimism stood constant at 27 per cent, Indian confidence slipped marginally to 75 per cent in Q2 from 78 per cent in Q1 of 2013.

Notwithstanding the relatively weak growth over the past 12 months, Indian businesses are the fifth most optimistic globally.

Chile was the most optimistic country globally with 88 per cent of businesses being optimistic, followed by Peru (86 per cent) in the second place, United Arab Emirates (86 per cent, 3rd), Philippines (84 per cent, 4th) and India with (75 per cent, 5th).

Around 46 per cent of Indian businesses cited economic uncertainty to be a major growth constraint, which meant businesses were more likely to delay investment in machinery or their staff, and thus leading to slower growth or lower confidence levels.

The survey further noted that 75 per cent respondents found accounting and money laundering frauds as a major concern for organisations in recent times, followed by bribery and corruption at 59 per cent.

As a preventive measure against frauds, the survey showed that a majority of the businesses (52 per cent) are appointing compliance personnel.

As many as 42 per cent considered conducting fraud awareness training, while 34 per cent of businesses are conducting stringent background checks and few others opted for whistle blower policy and instituting a regulatory compliance conduct for all employees.

"It is imperative to sustain oneself in a dynamic business environment despite economic uncertainty and other factors affecting optimism or growth in businesses. This can be achieved to a large extend by adopting a robust governance framework," Harish HV, partner-India Leadership Team, at Grant Thornton said.

He further noted that "one needs to talk about it and demonstrate through actions, the aspects of which the market recognises as good governance practices".