Are they all on happy pills?

A survey global CEOs by Pricewaterhouse Coopers has found that short term confidence is down but CEOs in India are remarkably confident of the future. Over the next 12 months 49% are very confident and 40% are somewhat confident, giving a total of 89% and over the next 3 years 70% are very confident and 27% are somewhat confident, giving a total of a mind blowing 97%. This sunny outlook for the future is despite realistic appreciation of the dangers to the economy. The major concerns are 1. exchange rate volatility - 84%, 2. inadequate basic infrastructure - 82%, 3. over-regulation - 82% and 4. availability of skills - 81%. Exchange rate of the rupee depends a lot on external factors, changes in regulation depends on what politicians gain from it, infrastructure takes years to build and skills can only be developed with good education over time. Retail sales during the December quarter saw the steepest decline compared to previous 23 quarters despite being the festival season. Aggregate net sales were down 9.4% to Rs 123.66 billion compared to the same period last year. Rural demand is down even though excellent monsoons meant bumper crops. That the growth of the economy was a mirage based on an exponential increase in property prices can be seen from the fact that employment grew just 2% between 2000 and 2012 but employment in the construction industry grew by 17%. In rural areas employment in construction grew by a whopping 300%, from 9.4 million in 2000 to 37.2 million in 2012. The combined shackles of very high inflation with falling growth has restricted middle class spending to such an extent that expensive restaurants are having to open cheaper outlets to get more customers. A lot of these restaurants have compounded their problems by shifting to shopping malls from high streets in the hope attracting well heeled customers willing to pay higher prices. In the process their rents and utility costs have soared forcing them to increase prices and hurt customers even more. Indian companies took on a lot of debt during the growth years which they are finding difficult to service. Why then are 97% of our industry captains so optimistic about the future? Are they banking on a Congress rout at the elections to get things going or are they simply on happy pills? Mystery.