India Inc confidence sinks sharply: NCAER

NEW DELHI: The confidence of India Inc in the country's business environment has dropped sharply because of high inflation, political uncertainty and volatile petroleum prices, according to economic think-tank NCAER.

Firms, particularly services companies, do not find the current investment climate positive and there has been a decline of 30 per cent in the outlook of firms regarding business climate of the country, shows a survey conducted by the National Council of Applied Economic Research (NCAER).

The Business Confidence Index (BCI) fell by 22.9 points from 148.5 points (as captured by the survey of April) to 125.8 points as calculated by the NCAER's latest survey conducted in July.



The index includes companies' perception of overall economic conditions prevailing over the next six months, financial position of the concerned firm over the next six months, prevailing investment climate in the economy and capacity utilisation.

"At the aggregate level, there is a 19 per cent decline over the previous quarter for overall economic conditions over the next six months," NCAER said in its monthly report Macrotrack.

The services sector's responses indicated the greatest fall, it said.

Also, the assessment of financial position of firms over the next six month, shows that the consumer durables goods sector has the greatest drop among the proportion of firms with an optimistic short-term outlook.

The percentage of firms expecting improvement in their financial position has declined sharply.

The drop in confidence, the NCAER said, "appears to be consistent with the rising uncertainty with respect to inflation and growth, particularly at the global level."