This is what hit business optimism in India; solution revealed

Business optimism in India was rising in the September quarter of last year and hit a peak of 91 per cent for the first quarter of 2018, Dun and Bradstreet said.

Business optimism in India slipped by 6.6 per cent to 85 per cent for the second quarter of the calendar year.

The reasons behind this fall in Business optimism in India were mainly 2 - the Rs 13,000-crore Punjab National Bank (PNB) scam and fiscal slippages. The survey of companies was conducted in March, when these bank fraud cases had already erupted

On the fiscal deficit front, the overshooting of the FY18 and budgeting for an elevated target for the next fiscal year have led to increased borrowing by the government, the report said.

Other factors include the squeeze on low-cost trade finance due to discontinuation of the letter of understanding (LoUs) following the PNB scam, rising protectionism in the US and widening of current account deficit.

The Solution: The report stressed on the need for the government to fix its own balance sheet along with that of the state-run banks.