The Business Confidence Index in India has moved up and shown signs of improvement after five consecutive quarters in March 2012 according to the latest NCAER (National Council of Applied Economic Research) MasterCard Worldwide Index of Business Confidence.
The 80th NCAER MasterCard Worldwide Index of Business Confidence is based on a survey which measures business confidence on four indicators. They include Overall economic conditions six months from now, financial position of firms six months from now, Investment climate and Level of current capacity utilization. All four indicators carry equal weight. The Index is released every quarter.
The Business Confidence Index (BCI) increased by 7.7 per cent over the previous quarter to 134.9 points from 125.2 points in January 2012. The rise in the Index indicates an increase in the investor confidence and expectation irrespective of a global slump and high inflation rates. The Index also registered improvement in business environment for the first time since January 2011.
The study reflects stability in business sentiments and cautious outlook of the business sector. This change in business sentiments is backed by a number of changes that have taken place on both domestic and global front during the last quarter of FY 2011/12. While moderation in economic growth rates persisted, inflation rate also moderated and the food grain harvest in 2011-12 has been at a record level.
"NCAER MasterCard Worldwide Index of Business Confidence shows some significant changes in the economy during the quarter ending March 2012. After a dip in the year 2011, the index showed positive business sentiments during this time period. In light of the current challenging economic environment, the next quarter index will be worth watching. The study continues to provide great insights on the key factors that affect the business and political environment in India.” Said T. V. Seshadri, Division President, South Asia and Country President India, MasterCard Worldwide.
It’s encouraging to see how the economy is recovering from the slump. The investors are regaining confidence and there is a positive outlook which has impacted this quarters result notes Dr. Shashanka Bhide, Senior Research Counselor, NCAER.
An analysis of the four indicators reveals an improvement in three out of four components of BCI over the previous quarter. Among the three, the largest improvement is in the case of present investment climate.
The survey that focuses on trends within firm-specific business outlook indicators also includes a Political Confidence Index (PCI) and a special section on Expectations and Evaluation of Union Budget 201213. The latest survey was conducted in March 2012 and received 528 responses. The data was collected through personal interviews and questionnaires sent to a diverse range of businesses across various regions in India. The Index and its accompanying report do not represent MasterCard financial performance.
Sector wise, analysis of BCI reveals a marked improvement across all major sectors of the economy except consumer non-durables sector. Four on five major sectors of the economy reveal improvement in business sentiments. The consumer non-durables sector shows a decline where BCI slipped 4.8 per cent from 142.7 in January 2012 to 135.8 now. An improvement in business sentiments is seen in the present round of survey, the highest optimism level being registered by firms in intermediate sector where BCI has jumped up by 14.5 per cent followed by services sector (134.5), capital goods sector (138.6) and consumer durables sector (135.8) with 7.2 per cent, 6 per cent and 4.2 per cent growth, respectively. Although business sentiments in consumer non-durables sector show decline, at the same time it exhibits the second most optimistic BCI among all sectors after capital goods sector.