Business confidence of India Inc drops 9.1% in Q4FY19, shows survey

The business confidence of India Inc dropped in the fourth quarter (Q4) of the financial year 2018-19 (FY19), showed a survey by the National Council of Applied Economic Research (NCAER).

The Business Confidence Index (BCI) plunged 9.1 per cent to reach 115.4 points during the period on a quarter-on-quarter (q-o-q) basis.

On a year-on-year basis, the index was down 12.2 per cent, showed the survey by the think tank.

But, political confidence index (PCI) of businesses was up 12.1 per cent in Q4 on a quarterly basis. 

The PCI measures businesses’ expectations from the government on managing economic growth, maintaining a conducive political environment and pushing economic reforms, among other yardsticks. The BCI is made up of four components, all of which have equal weight in the computation of the index.

Sentiments remained virtually unchanged for the component “the overall economic conditions will be better in next six months”.

Business sentiments worsened for the remaining three components — the financial position of the firms will improve in next six months, the present investment climate is positive, and the present capacity utilisation is close to or above optimal level.

The percentage of positive responses on “present investment climate is positive” fell from 46.7 per cent in January 2019 to 37.5 per cent in April 2019.

The BCI declined in all the sectors on a q-o-q basis, signalling a pervasive worsening of sentiments. After showing improvement in January 2019, the BCI of consumer durables and consumer non-durables sectors declined by 12.1 and 15.9 per cent, respectively. on a q-o-q basis.

All the four regions showed a decline in the BCI figures on a q-o-q basis between January and April 2019, with the East showing the steepest fall by 17.3 per cent. The magnitude of decline in the BCI in west, north and south were 8 per cent, 3.6 per cent and 8.7 per cent, respectively.