Business confidence buoyant in Q3 FY22, says economic think-tank NCAER

The business confidence has remained buoyant in the third quarter of the current financial year, said economic think-tank NCAER.

The business confidence has remained buoyant in the third quarter of the current financial year, though the pace of rise was moderated by a spurt in the number of COVID-19 cases in December 2021, said economic think-tank NCAER.

Business sentiments recovered in the October-December quarter of 202122 as compared to those prevailing in the July-September quarter, the NCAER said in a release.

The NCAER-NSE Business Confidence Index (BCI) increased by 6 per cent on a quarter-on-quarter (q-o-q) basis and by 46.6 per cent on a year-on-year (y-o-y) basis.

"As compared to the last quarter, there was a moderation in the pace of increase of the BCI. Business sentiments were affected in the last week of December as the number of COVID-19 cases went up and travel restrictions came into place," it said.

The upward movement in the Business Confidence Index (BCI) was driven by an improvement in sentiments for all the four components of the BCI, namely 'overall economic conditions will improve in the next six months', 'financial position of firms will improve in the next six months', 'present investment climate is positive as compared with six months ago' and 'present capacity utilisation is close to or above the optimal level'.

"Sentiments were broadly buoyant across sectors with the exception of the consumer non-durables sector, where the BCI fell by 2 per cent in 202122:Q3 on a quarter-on-quarter basis. The plateauing of business sentiments in this key sector lends credence to the K-shaped recovery of various stakeholders," the NCAER said.

The variation in business sentiments across sectors narrowed in the third quarter of 202122 as compared to that in previous quarter.

The NCAER-NSE Political Confidence Index (PCI) remained virtually unchanged between the second and third quarter at 107.8.

However, there was a 43.1 per cent year-on-year growth in the PCI in the third quarter of 2021-22.

The shares of positive responses rose for three components of the PCI -- 'managing the exchange rate, 'managing inflation', and 'managing a conducive political climate'. It fell for three of the components -- 'pushing economic reforms forward', 'external trade negotiations' and 'managing government finances', and remained unchanged for the remaining two components -- 'managing overall economic growth' and 'managing unemployment'.