Despite a slowdown in industrial activity,Corporate India’s optimism in the business outlook for the October-December quarter is at a record high on the back of unprecedented foreign capital inflows and strong overseas demand for domestic products,says a new report.
As per the National Council for Applied Economic Research (NCAER) and US secure payments giant Mastercard’s ‘Worldwide Index of Business Confidence’,the business confidence index (BCI) for the third quarter of FY’11 stood at 162.1 points,compared to 155.9 points in July.
However,it appears that businessmen’s confidence in Indian policymakers’ ability to steer the economy dipped in the October-December quarter in comparison to the second quarter of FY’11,as per a political confidence index (PCI) in the NCAER-Mastercard report.
The PCI fell by 9.9 per cent to 116.2 points in October from 129 in July,2010.
According to the report,the continued business optimism is mainly attributed to the overall growth in industrial activity despite a slowdown,a clear recovery in export volumes and the improving fortunes of capital markets.
However,the report noted that the high level of inflation remains a concern.
“The latest NCAER-MasterCard Worldwide Index of Business Confidence suggests that business sentiments are mirroring the optimism shown by current economic indicators,” MasterCard Worldwide (South Asia) General Manager T V Seshadri said.
Echoing a similar view,NCAER Senior Research Counsellor Shashanka Bhide said: “The survey reflects an improvement in business sentiment in the manufacturing sector as a whole and particularly in smaller firms. The responses point to expectations of strong performance on sales and production and moderation in price trends over the next six months.”
The index is based on a survey,which measures business confidence on the basis of four parameters,including overall economic conditions,the financial position of firms,the
investment climate and the level of capacity utilisation.
All four components of the index have shown remarkable improvement during the quarter under review vis-a-vis the previous quarter.
The report noted that about 53.8 per cent of the respondents saw improved capital market conditions now,compared to six months back.
The survey was conducted in September,2010,and the BCI and PCI were formulated on the basis of 537 responses.