The Hindu : Renewed optimism in business sector

Online edition of India's National Newspaper
Sunday, Feb 09, 2003

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Renewed optimism in business sector

By Our Special Correspondent

NEW DELHI FEB. 8. Despite official projections of a low GDP growth of 4.4 per cent this fiscal, the National Council of Applied Economic Research has found that the business confidence index created by it has gone up by 12.4 percentage points over the previous round.

The latest business expectation survey undertaken by the council was in January 2003 while the previous round was undertaken in October last year when the BCI remained virtually stagnant at the June 2002 survey level. The improvement in the BCI "clearly reflects the renewed optimism of the business sector, which had taken a beating in the previous round due to impact of adverse factors, particularly the delayed monsoon.''

According to the latest survey, all the four components of the BCI show considerable improvement in the current round compared to the previous round.

Whereas the indicators of overall economic conditions and the financial position of the firms were up by 5.9 and 7.6 percentage points, respectively, the indicator of investment climate and capacity utilisation were up by 8.2 and 7.6 percentage points, respectively.

Unlike the divergence in the assessment of different dimension of the business outlook in the previous round, the improvement in all the four dimensions of BCI in the current round suggests that the renewed optimism in business outlook was broad based, the NCAER has said.

According to the council, the disaggregation of the BCI at sectoral levels showed that upswing in business sentiment was discernible across sectors as well.

Except for consumer non-durables, the BCI for all other sectors registered an increase of over 10 percentage points.

The highest increase in the BCI was observed for the intermediate goods sector at nearly 15 percentage points while for the consumer non-durables segment, there was a decline of 0.7 percentage points when compared to the previous survey.

The region-wise analysis of the BCI showed that across regions there was an improvement with South recording the maximum gain in the current round.

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