New Delhi: Global economic uncertainties and domestic issues like continuous tightening of monetary policy by RBI are likely to "adversely" impact the Indian economy until December, a survey said.

Both global and domestic factors have dented the level of confidence of Corporate India, which has hit a new 12-month low in the quarter ending June 2011, FICCI said in its Business Confidence Survey.

"There is worry all around about the current performance of the economy, industry and at the firm-level. Worse, there is apprehension that all these parameters would be adversely impacted in the next six months (July-December)," it said.

The Overall Business Confidence Index value has come down to 51.6 in the first quarter of this fiscal compared to 63.7during the last quarter of 2010-11, it said.

At the global level, the US and the euro-zone are reeling under fiscal crisis. There are growing apprehensions about the world economy entering into another recession, it said, adding that this would have a bearing on the performance of the Indian economy both through trade and funds flows channels.

At the domestic level, it added that the persistent contractionary monetary policy stance of RBI is now clearly taking a toll on the performance of the industrial sector in particular and the economy in general.

RBI has hiked key rates 11 times since March 2010 to curb inflation, which was 9.44 per cent in June and eased a bit to 9.22 in July. It is likely to continue with the tight monetary policy stance to fight inflation and affect another hike in key interest rates in September.

The survey, in which 295 firms participated, said, "The flagging of business confidence in India should be a matter of concern for policymakers as falling confidence levels of India
Inc can take a toll on investments and other business plans and which could undermine our economic growth".

The respondents said the government should take necessary steps like addressing land acquisition issue, bringing down the cost of credit for small and medium units, and ensure the introduction of GST and DTC from April 2012 in order to boost business confidence.

It also said there is a need to liberalise FDI reforms in areas like insurance and multi-brand retail, increase spending on infrastructure sector and improving the governance framework to ensure quick policy implementation and fast-track project clearances. (The survey said the factors constraining business performance include weak demand, rising interest costs and high raw material prices and wages.

"Interest rates charged to surveyed firms by their banks for both working capital loan and term loan have increased appreciably over the last six months," it said.

On the apprehension about another round of interest rates hike, about 45 per cent respondents said it would have a ‘serious’ impact on their investment plans.

(Agencies)