The Hindu Business Line : Business confidence index rises 5.4% in Q3

The Business Confidence Index (BCI) of Indian industry appears to be inching up to the peak level of January 2007, even as the rise is minimal in the case of consumer non-durables.

In its latest BCI tracked by the non-profit think-tank on policy the National Council of Applied Economic Research (NCAER) shows that the latest round for the third quarter of the current fiscal has logged an increase of 5.4 per cent, which is the second successive improvement, following the recovery in the second quarter.

The investment climate has emerged as the most important contributor for the pick-up in confidence factor with the BCI across firm-size groups showing improvement in all the size groups, except for the category of firms with an annual turnover of Rs 1-10 crore. But, public sector firms displayed a sharp improvement in confidence index by 38.8 per cent.

While the western and southern regions reveal mild decline in the BCI in the current round, the eastern and northern regions show distinct improvement. The production trends follow closely the expectations of growth of domestic sales. Unlike exports, the shift in the expectations of import growth is for a clear upturn.

The third quarter seems to have been one of stable input cost conditions for industry and the outlook for the next six months on the production cost and output price is also one of modest increase.

After a decline in the political confidence index (PCI) in April 2007, the index recovered in subsequent two rounds and has reached its peak. Major improvement in PCI in the extant round has supervened from a sharp improvement in the rating of external trade negotiations.

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