Business Confidence Index down 15% in Aug-Oct: NCAER

New Delhi


As the economic scenario and business environment of India has worsened in the past few quarters, a survey by National Council of Applied Economic Research (NCAER) shows that the business confidence index of the country declined by 15.3 per cent during the August-October quarter compared to the previous quarter.

"The numbers suggest a deep and all-pervasive worsening of business sentiments," a statement by NCAER said.

The confidence index among business sectors fell by 22.5 per cent on a year-on-year (Y-o-Y) basis during the August-October quarter.

"NCAER's Business Confidence Index (BCI), an indicator of business sentiments across Indian industry, stood at 103.1 in Q2 2019-20 continuing its volatile journey, falling by 15.3 per cent in October on a quarter-on-quarter (Q-o-Q) basis, despite a small reprieve in July 2019," it said.

The fall in the index in the quarter ended October 2019 was driven by a deterioration in sentiments across the four components of the survey.

The subjects which were dealt with during the survey of around 600 Indian companies included 1) the overall economic conditions will be better in the next six months; 2) the financial position of firms will improve in the next six months; 3) the present investment climate is positive; 4) the present capacity utilisation is close to or above optimal.

The steepest decline was for the component, 'the overall economic conditions will improve in the next six months', where the share of positive responses fell from 58.9 per cent in July 2019 to 46.3 per cent in October 2019, the NCAER statement said.

The percentage of respondents expecting that 'the financial position of firms will improve in the next six months' decreased from 48.8 per cent in July 2019 to 39.3 per cent in October 2019.

The muted business sentiment was further reinforced by the barely 32.5 per cent of the respondents who believed that "the present investment climate is positive compared with six months ago" while the component of "present capacity utilisation is close to or above optimal level" dropped by 86.2 per cent to an all-time low since July 2009.

The NCAER said all the five sectors covered for the survey -- consumer non-durables and durables, intermediate goods, capital goods and services, showed a deterioration of business sentiments, whereby the confidence index of each of the sectors declined by 11.4 per cent, 21.4 per cent, 18.3 per cent and 13.1 per cent respectively in October 2019 on a quarter-on-quarter basis.

The business confidence index of firms across ownership-types declined, whereas that of public sector companies rose by a significant 15.6 per cent between July and October 2019.

Companies owned in partnerships or by individuals showed the biggest dip of 21.5 per cent in the index during the period under review, followed by the private limited and public limited companies with 14.4 per cent and 11.3 per cent respectively.

"Business sentiments regarding production, domestic sales, exports, imports of raw materials and pre-tax profits remained subdued in October over July 2019, among all firm groups across industry type, in line with the overall trends. The labour market outlook for the next six months continued to remain muted," it said.IANS