The Hindu : Business confidence index up

Online edition of India's National Newspaper
Wednesday, Jul 17, 2002

Business

Business

Business confidence index up

By Our Special Correspondent

NEW DELHI JULY 16. The National Council of Applied Economic Research (NCAER) has found an overall improvement in business expectations through its quarterly business expectation survey. The survey conducted in April revealed that the overall business confidence index (BCI) was up by 10.8 per cent.

During the survey, all the four components of BCI have shown discernible improvement over the previous rounds. The indicator of overall economic conditions was up by around 14 per cent, the indicator of financial position increased by 5 per cent, the indicator of investment climate increased by 28 per cent while the indicator of capacity utilisation showed an improvement of over 7 per cent. The improvement in all the four indicators suggests a broad-based recovery in business confidence, the NCAER has said.

Three critical points are said to have influenced business confidence in April this year. One is the increase in the desired level of inventories with the higher inventory demand sees in consumer durables and capital goods. Second, demand conditions appeared to be improving with greater proportions of firms reporting increases in sales orders. Finally, labour hiring appears to be set for an increase relative to the experience of the previous three months with similar trends in the case of wage rates as well.

In response to the NCAER survey, more than 50 per cent of the respondents said they had new investment proposed in 2002-03. About 42 per cent of the plans are for improving quality of products or improving efficiency and about 25 per cent of the respondents plan to move into new lines of business. About 33 per cent plan to add to the existing capacity.

Interestingly, about 65 per cent of the respondents said the 2002-03 budget proposals had no significant impact on their investment plans. Consequently, the NCAER has concluded that though there is variation in the pattern of positive and negative impact of the budget across sectors, the business community appears to have taken the budget in its stride.

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