The Hindu Business Line : Business confidence index moves up eight points

New Delhi, Dec. 28 The business confidence index (BCI), a barometer measuring the confidence factor of the corporate sector, has gained eight points in the second quarter of the current financial year, according to a survey done by the National Council of Applied Economic Research (NCAER).

The findings represent a turnabout as the BCI had dropped significantly in the previous two quarters. The drop was interpreted as the short-term response of the business community to the monetary policy.

“The rebound seen in BCI indicates that the sentiments of the business community may have factored in the high interest rates and stronger rupee,” the 62nd round of the Business Expectations Survey noted.

The NCAER survey also said that there were three main components of BCI which were responsible for the resurgence.

“The first reason for the gain was due to the perceptions on the overall economic condition for the next six months and also the outlook of firms for the next six months. Finally, the present investment climate as compared to the past six months has also resulted in the increase in the BCI,” the study said.

The present round found that the BCI increased across all the sectors when considered at an aggregate level. The maximum gain in business confidence was noticed in capital goods and services sectors (13.5 points and 13.3 points respectively). The consumer non-durables sector gained 2.7 points, which was the lowest among the major sectors.

“The improvement in BCI was witnessed across all the four regions in the country, with the rise in business confidence being the greatest in the west,” it said.

The study added that across-the-board improvement in BCI in all the four regions is a pointer to the new business environment. “Nevertheless, there is a significant difference in the extent of rise in BCI between the west and the east where it is higher, and north and south where it is lower,” the study noted.