Business confidence dips marginally on inflationary concerns

Business confidence in India registered a marginal decline in August from a peak attained in April, according to a survey by the National Council of Applied Economic Research (NCAER).

The NCAER-MasterCard Worldwide Business Confidence Index (BCI) came down to 155.9 points in the first quarter of 2010-11 from a peak of 156.8 points in the January-March quarter.

This is the first drop in business confidence level in the last four quarters.

According to the report, the marginal decline reflects continued optimism tempered by concerns. The continued optimism is attributed to the sustained robust industrial activity and expectations of continued global economic recovery, while high inflation rates have emerged as the major concern.

“The latest survey suggests that business sentiments are levelling off at the peak after increasing for four successive quarters. This quarter, BCI has also focused on a special report on inflation, interest rate and exchange rate, which indicates a tighter monetary regime in the coming months,” said T V Seshadri, vice-president and country general manager (South Asia), MasterCard Worldwide.

The survey, which measures business confidence of four indicators, was compiled with 533 responses. The four indicators are “overall economic conditions six months from now, financial position of firms six months from now, investment climate and level of capacity utilisation”.