The CII-BCI constructed as a weighted average of the Current Situation Index (CSI) and the Expectations Index (EI), was higher among the non-manufacturing firms engaged in provision of services as compared to manufacturing firms. The BCI was significantly higher for non-manufacturing firms by 4.4 points compared to the manufactured firms.
The CSI that compares current business conditions with the previous six months has gained 0.9 points. This reflects that a larger number of responding firms have appraised better current conditions for the growth of the overall economy, the sector in which they operate and their individual growth performance to be better compared to the previous six months.
The EI that reflects the perceptions of Indian industry with regards to performance of their company, sector and the Indian economy for the next six months was up by 1.7 points over the previous business outlook survey. Here too, non-manufacturing firms came out to be appreciably more bullish about growth prospects compared to manufacturing firms.
The firms expect GDP growth for the year 2005-06 to be more than 7%. This was revealed by most of the respondents of the business outlook survey and reflects a significant increase in business confidence when compared to GDP growth expectations revealed six months ago.
This strong overall showing was reflected in all the underlying components of the survey. The survey revealed that 80% of the respondents plan to increase investments during the second half of 2005-06. Capacity utilisation across the board has increased and about 60% of the respondents have expressed confidence that capacity utilisation for the second half of 2005-06 would be up to 100% and yet another 19% of the respondents expressed confidence that the capacity utilisation would exceed 100%.
The value of production was also expected to increase in the next six months and this was revealed by 80% of the respondents. In fact, for 66% of the respondents production increased in the first half of 2005-06. Further increase in production was likely because of expected increase in new orders.