Financial Daily from THE HINDU group of publications
Saturday, Aug 09, 2003
Financial Daily from THE HINDU group of publications Saturday, Aug 09, 2003 |
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Industry & Economy
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Economy NCAER business confidence index rises in July Our Bureau
New Delhi , Aug. 8 REFLECTING buoyant business sentiments among corporate and industrial houses, the business confidence index (BCI), being tracked by the National Council of Applied Economic Research (NCAER), has surged 14 percentage points in the latest round over the previous round to a record level of 125.7 in July 2003. The pronounced upswing in the latest round by the Council is "clearly a reflection of business sentiments overcoming the impact of Iraq war that had led to a marginal decline in BCI during the previous round." The Council said increase in BCI is fairly broadbased across sectors, region and the four components of BCI viz, overall economic conditions, investment climate, financial position of the firm and the capacity utilisation, all getting higher rating. The Council said that while across the sectors upbeat mood is more pronounced for the intermediate goods manufacturers, across the size class, it is more marked for the firms belonging to the middle category of Rs 10 crore to Rs 100 crore. The business outlook of the public sector firms continues to be grim with their business confidence further plummeting in the current round. More than half of the firms surveyed are expecting their capacity utilisation to go up in the next six months. Even now nearly 57 per cent of the firms are reporting that their capacity utilisation is 75 per cent or more. Of the new investment in the current financial year, a little over one third is for quality/efficiency improvement. Though firms witness an upswing in business sentiment in this round, they are expecting stagnation in sales and production. But they are also witnessing a decline in the input prices and also expect the same during the next six months. The labour market would remain tight over the next six months and wages might see downward pressure. The cost of borrowing for larger firms is lower as compared to the smaller firms. Information technology expenditure, though tangible across all the sectors, is more pronounced in the case of firms belonging to services sector, the Council survey noted.
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