Survey shows decline in biz confidence

The latest Business Expectations Survey of the National Council of Applied Economic Research (NCAER) has registered a decline of more than four percentage points in the business confidence index in the October-December period over the previous quarter.

The survey has suggested a decline in overall economic growth and investment climate, but at the same time, said that the financial position of the firms and capacity utilisation are at the same level as in the previous quarter. On a sectoral basis, it said that the capital goods sector has registered improved optimism while the manufacturing and services sectors have revealed lower business sentiment.

In terms of percentage change over the last round, the survey has shown nearly a 100 per cent drop in the consumer durables sector. The firm-level indicators reveal lower expectations of improvement in domestic sales, production and profitability conditions of the firms in the next six months. On the other hand, exports and imports reflect improved expectations in the short-run.

The Political Confidence Index (PCI) has however shown an improvement of 7.7 percentage points in January 2013 over the last quarter. But a combination of high fiscal deficit and decelerating economic growth has been cited as a disappointing aspect of the current economic situation.

This is mainly on account of decline registered in the agricultural sector and a weakened growth in the industrial sector, the survey said. The survey, which is 83rd in the series, has registered a Business Confidence Index of 119.7 points as compared to 125.4 points in October 2012.

Disaggregation of responses by regions indicates a turnaround in the pattern of changes in three of the four regions. For example, while West, East and South have registered a decline in BCI, North has shown improvement. Further, while the present survey reflects decline in the perceptions of larger and smaller-sized firms, medium-sized firms signal slight improvement over previous quarter.