New Delhi: India’s business confidence has shown a significant recovery in the second quarter of the current fiscal year, bouncing back after four consecutive quarters of decline.
A survey by the National Council of Applied Economic Research (NCAER) indicates that firms are more optimistic about production, domestic sales, and exports, even amidst ongoing global tensions.
The Business Confidence Index (BCI) climbed to 107.8 in Q2 FY22-23 from 99.8 in the preceding quarter. While this marks a positive trend, it remains below the 142.6 recorded in the same period last year. The survey, conducted in September, included 502 businesses of varying sizes across major Indian cities like Delhi NCR, Bengaluru, Chennai, Kolkata, Mumbai, and Pune.
This renewed confidence stems from improved expectations across all key components: overall economic conditions, financial health, investment climate, and capacity utilization. The proportion of firms anticipating better economic conditions over the next six months rose to 50% from 43% in Q1, and those expecting an improved financial position increased to 41% from 37%.
NCAER Professor Bornali Bhandari, who spearheaded the survey, highlighted, “The data indicate a broad-based recovery in sentiments across both MSMEs and large firms.” She further noted, “Overall business prospects improved both domestically & externally, and cost sentiments have moderated.” Firms are also more optimistic about production and sales, with 68% expecting increased production and 71% anticipating higher domestic sales.
Confidence also improved across business sizes, with the BCI for MSMEs rising to 100 from 93, and for large firms to 120.3 from 111.6. A positive development is the moderation in cost expectations, especially for raw materials, with fewer firms expecting price hikes. However, hiring expectations remain subdued, suggesting a cautious approach to employment growth.