Business confidence falls to 53.2 from 55.4 :Business Today-C fore Survey

The latest Business Today’s Business Confidence Index has dipped for the fourth consecutive quarter. On a scale of 100, the confidence level dropped to 53.2 in the third quarter of 2015/16 as compared to 55.4 in the second quarter and 57.4 in the first quarter. The business confidence has been consistently going down since October-to-December 2014 quarter when it reached its third-highest level since the launch of the survey in January-to-March 2011 period. The latest BCI is the lowest point for the index since the Narendra Modi-led government has taken charge in May 2014.

The losing optimism among corporate leaders reflects that economic and business environment remain challenging. As in the previous survey, the confidence level among businesses of all types – heavy industry, light industry and services – have witnessed drop in sentiments. In addition, businesses of all sizes have seen drop in sentiments in the October-to-December quarter. Several components of the survey point out that quarter ending December was not satisfying. Parameters such as overall economic situation, overall business situation, cost of external finance, production level, order book and sales pick up have registered decline as compared to previous survey. In the case of overall economic situation, more number of respondents – 35 per cent – expect the economic situation to get worse in the January-to-March quarter as against 18 per cent respondents predicting the same in the previous survey. However, respondents are hopeful that situation might improve in other areas such as profits and hiring. For instance, only 27 per cent respondents are expecting hiring situation to deteriorate in the January-to-March period, which is lower than 46 per cent respondents in the previous survey. Also, more corporate leaders expect private sector investments to pick up in the remaining part of the year. Some 34 per cent respondents say that private investment cycle will get better in the last quarter of 2015/16 as compared to 19 per cent respondents who expected uptick in private sector investments and industrial activity in the previous survey. The survey shows that a large number of respondents do not expect low commodity prices and public spending to benefit economy in 2016. Aroon Purie, Editor-in-Chief, India Today Group, of which

Business Today is a part of, said low confidence levels over a long period of time creates a vicious cycle that is difficult to break. “The upcoming budget holds the key for the economy. The onus is on the finance minister and the prime minister to revive the dipping confidence levels. Unless measures are taken to spur growth and reduce bottlenecks to business, the confidence index will continue to dip”