Indian businesses have begun to feel bullish about growth, suggests a national level business sentiment survey conducted on 500 companies across the country by a Delhi based economic think tank.

The 118th Round of Business Expectations Survey (BES), carried out by the National Council of Applied Economic Research (NCAER) in September 2021, has found that the NCAER Business Confidence Index (BCI) has increased by 90% on a quarter-on-quarter basis (during July-September) and by about 80% on a year-on-year basis. The BCI is also higher than what it was in the second quarter of 2019–20, signalling an improvement in sentiments over the pre-pandemic period. The upward movement in 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; the 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.

“The current BES survey points to a recovery in business sentiments post the second wave of pandemic. The recovery is broad-based across firm size, ownership, and industrial sectors,” says Poonam Gupta, Director General, NCAER.

NCAER has been carrying out the BES on a quarterly basis since 1991, covering 500 firms across four regions. The current round revealed that barring the west, business sentiments have improved for all the regions. The BCI decreased in the west by nearly 10% in Q2 2021–22, whereas it increased in the East (Kolkata), North (National Capital Region of Delhi), and South (Chennai and Bengaluru).

Bornali Bhandari, Senior Fellow, NCAER, pointed out that “the difference between business sentiments related to large firms (with an annual turnover of more than ₹500 crore) and those pertaining to small firms (with annual turnovers of ₹100 crore and less), which had widened between the second quarter of 2019-20, and in the third quarter of 2020-21 had narrowed this year, particularly in the July-September quarter of 2021-22. The narrowing of sentiments offers hope that the uneven recovery might give way to a more even shaped one in the future quarters.”

According to the survey results, the sentiments have improved with regard to production, domestic sales, exports, new orders, imports of raw materials, and pre-tax profits.

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