Business Confidence At A New High, Shows NCAER Survey

New Delhi, Nov 7: | Updated: Nov 8 2003, 05:30am hrs
The National Council for Applied Economic Researchs (NCAER) business confidence index (BCI) based on its latest quarterly business expectations survey (BES), has hit a new high of 129.4 points in October, up by 3.5 per cent over the July index of 125.7 points.

The BCI has improved on account of improved expectations of overall economic conditions, excellent corporate results and bumper kharif harvest.

On the international front, stable economic environment in the US and Japan showing revival tendencies have further aided the confidence among the domestic corporates, says the NCAER survey, based on 580 responses from companies. However, there has not been any major improvement in the investment climate and capacity utilisation of companies.

Among the regions, while the Eastern region shows an upswing in BCI, the other three show a downturn. Companies in the non-durable sector are relatively more optimistic and companies ranging from revenues of Rs 100-500 crore do not share the general optimism, which is in spite of an improvement in business confidence.

According to BES, a large proportion of bigger firms in general indicate gain in productivity more than smaller firms due to efficiency enhancing measures undertaken by them in the new millennium.

At the corporate level, the change in scale of operations, adoption of technology, restructuring of marketing chain, introduction of higher information technology in management and supply network all gathered pace in the new millennium as compared to the second half of the 90s, says the survey.

The October BES is based on 580 responses carried out during September and October. The sample or the respondents have been spread over regions, sectors and size class of firms. The survey was based on four questions relating to overall economic conditions, financial position of the firms, capacity utilisation and investment climate. Although all the four questions carried equal weight and a weighted business confidence index (BCI) was arrived at based on sectoral level responses.

Unlike previous rounds, the BCI by sector, region size and ownership in the round is based on capacity utilisation close to or above optimal level.

The survey says relatively more and more firms are looking to hire casual/ permanent labour force in the current survey as compared to previous survey.