Indian service sector to grow in next 12 months: KPMG

May 14th, 2009 - 4:18 pm ICT by IANS  

KPMG New Delhi, May 14 (IANS) India’s service sector is set to grow substantially in the next 12 months, though its business activity prospects remain lowest in the BRIC block comprising Brazil, Russia, India and China, says a survey by global auditing agency KPMG released Thursday.
April’s BRIC Business Outlook Survey, which covered around 1,400 service sector firms in the BRIC nations, said 31.1 percent of Indian companies saw their activity levels expanding, up from 15.3 percent last autumn.

“The improved sentiment is encouraging and reflects the fact that many sectors have a significant dependency on the domestic market and have been positively impacted by lower interest rates, lower inflation and improved liquidity,” said KPMG India chief executive Russell Parera.

“The outcome of the national elections and the monsoons will in the next few months determine how this trend develops.”

Among the BRIC nations, the level optimism is highest in Brazil followed by Russia and India, KPMG said, and added that the sentiment in China too had eased compared with the previous survey.

Among sectors, hotels and restaurants were the most bullish, it said.

Around 37 percent of companies forecast new orders to grow in 12 months, compared with 16 percent that anticipated a fall. Indian service firms also estimated input costs to rise during this period, though a substantial number said they would nevertheless increase capital expenditure.

According to the KPMG survey, 43 percent of firms said they would increase capital expenditure, with only 7 percent planning to prune it.

Revenues of Indian service firms are expected to expand in 12 the next months, with 32.5 percent of firms saying they believed their profits would rise.

Employment is also forecast to grow during the coming year in line with expectations of higher activity.

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