Profit expectations have also improved in the current quarter (Apr-Jun 2016) with close to half of the firms (48.7%) anticipating an increase in their after-tax profits in the said quarter. This is despite the fact that a large share of respondents (37%) had experienced a decline in after- tax profits in the previous quarter (Jan-Mar 2016).

A majority of the firms have placed their investment plans on hold in Apr-Jun 2016 quarter, notwithstanding the expectation of improvement in sales and new orders in the said period. Existing unutilized capacity and unforthcoming demand have prompted nearly half of the firms (49.7%) to maintain status quo on their domestic investment while the uncertainty in the global economic environment has forced larger share of firms (60.5%) to keep their international investment plans unchanged.

A large proportion of the firms (40%) feel that a turnaround in the global economy is required to jumpstart the private investment cycle. Nonetheless, a major share of the firms (43%) feel that high government spending was instrumental in bringing about the turnaround in the corporate sector earnings in Jan-Mar 2016 quarter. Firms, when asked to rank their concerns, rated low domestic demand, fragile global economic recovery and lack of political consensus on economic reforms as their top three concerns.
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