India business confidence dips on slowdown fears

NEW DELHI (Reuters) - Expectations of a slowdown in Indian economy due to high interest rates, a firm rupee, surging global oil prices and a fallout of the subprime crisis dented business confidence in July-Sept, a survey said on Wednesday.

The survey of 321 companies by trade body, Federation of Indian Chambers of Commerce and Industry (FICCI), showed the business confidence index declining to its five-year low of 61.2 points, from 68.4 points the previous quarter.

It is down 15 percent from 72.1 points a year earlier.

"The industry's perception is that growth in the country is slowing down," the survey said.

Economic growth decelerated to 8.9 percent in July-September, from 10.2 percent in the same period last year. The central bank expects a moderation in growth to 8.5 percent during 2007/08, from 9.4 percent clocked in the previous year.

"Reserve Bank of India must review its credit tightening policy and slowly make it more accommodative, and efforts should be made to prevent any further appreciation of the rupee," the survey said.

"With oil prices hovering around the $100 a barrel mark, continued uncertainty with regard to a fallout of U.S. subprime crisis and RBI maintaining its tight monetary stance, members of corporate India are apprehensive about the country's economic and industrial performance in near future," it added.

The expectations index that reflects firms' outlook for next six months fell to 62.2 points, from 70.1 points in the previous quarter and 71.3 a year earlier.

The profit index declined to 18 points in September from 29 points in June, while sales index fell to 55 from 63 during June. The export index was in negative territory by September, from 28 points in June.