New Delhi, July 13 (KNN) Private sector business sentiment has fallen to its lowest level since October 2009 as firms expect a subdued order flow in the next 12 months and job creation is likely to be moderate, says a Markit survey.

According to the survey, ‘Indian Business Outlook’, conducted by Markit, private sector firms remain optimistic about the prospects of growth in activity over the coming year. “Nevertheless, the sentiment has weakened as the net balance of +22 per cent in June is the lowest since the composite data was first available in October 2009,” it said. The reading of the prior survey was +30 per cent. The survey also said that the net balance in India is also below the global average.
 
Pollyanna De Lima, an economist with Markit, said that output, new business and revenues for Indian companies are anticipated to expand over the course of the next year.

"Indian companies have maintained a positive outlook in June... Nonetheless, in all cases, the levels of positivity have weakened since the February outlook as forecasts of competitive pressures and higher cost burdens have weighed on confidence," Markit Economist Pollyanna De Lima said.

The factors seen as "threats" to business outlook include competitive pressures, raw material shortages, increased tax rates and strong inflation, the survey said.

In line with expectations of weaker increases in new business inflows, revenues are expected to expand at a softer rate and the degree of optimism towards profitability growth has also weakened, Markit added.

“Nonetheless, in all the cases, the levels of positivity have weakened since February, as forecasts of competitive pressures and higher cost burdens have weighed on confidence,” she said, adding that as a result, Indian companies have lowered their expectations on employment.
 
De Lima admitted that hiring is still foreseen but the rate at which companies are willing to take on additional workers has moderated. This is the case in both the manufacturing and service sectors, she said. “On the price front, the panellists have maintained the view that costs and charges will rise in the year ahead. In both cases, the rates of inflation are anticipated to be higher than their respective global averages,” she added.
 
On the price front, panelists maintained that costs and charges will rise in the year ahead.

"In both the cases, the rates of inflation are anticipated to be higher than their respective global averages," Lima added.

In its last policy review on June 2, RBI had cut the repo rate by 0.25 per cent for the third time this year to spur investment and growth, but hinted that there may not be any more cuts in the near term. (KNN Bureau)