India's Business Sentiment Recovering, Outlook Optimistic

National Council of Applied Economic Research (NCAER) carried out the 114th Round of the NCAER Business Expectations Survey (BES) in September 2020 as the country entered the fourth phase of unlocking of the economy. After declining for two consecutive quarters (Q4:2019-20 and Q1:2020-21) and falling to its lowest ever of 46.4 in Q1:2020-21 (Round 113), the NCAER Business Confidence Index (BCI) increased to 65.5 in Q2:2020-21 (Round 114), a quarter-on-quarter (q-o-q) increase of 41.1%.

However, on a year-on-year (y-o-y) basis, the Q2:2020-21 BCI was lower by 36.5% compared to Q2:2019-20 and remained lower than the BCI in Q4:2019-20. Round 114 of the NCAER BES therefore suggests that although business sentiment is recovering from its lowest ever level in Q1:2020-21, it continues to remain subdued. The proportion of respondents expecting that 'overall economic conditions will improve in the next six months' rose from 17.1 per cent in Q1:2020-21 to 29.8% in Q2:2020-21, noted the survey.

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