Highlights of NCAER’s most recent Business Expectation Survey for Quarter 4 2014-15
Dr Bornali Bhandari Fellow NCAER noted that “the downturn in (relative to December 2015) sentiments about the macro economy is a matter of concern. Declining sentiments about the investment climate is worrisome in the back ground of patchy and uneven growth in 2014–15 and does not foretell improvement investment scenario in 2015–16.”
Brief Methodology: The National Council of Applied Economic Research (NCAER) has been conducting Business Expectations Survey (BES) every quarter since 1991. It tracks the business sentiments of over 500 Indian companies to compute the composite index Business Confidence Index (BCI). The survey consists of responses from firms/industries across six cities to assess business sentiments in four regions of India. Delhi NCR represents the North Mumbai and Pune represent West Kolkata represents the East and South is represented by Bangalore and Chennai. Industries are adequately represented with regard to ownership type (namely public sector private limited public limited partnership/individual ownership and MNCs) industry sector (namely consumer durables consumer non-durables intermediate goods capital goods and services sector) and firm size based on their annual turnover (in the range of less than â‚¹1 crore â‚¹1 to 10 crores â‚¹10 to 100 crores â‚¹100 to 500 crores and more than â‚¹500 crores). The sample is drawn randomly from a list of industries in each city drawn from various sources. A sizeable number of units taken in one round are retained in the next round to maintain continuity of analysis.
The Business Confidence Index (BCI) is developed based on four questions. Two are devoted to macro factors and another two to micro factors. All four questions carried equal weight. The BCI is a simple average of all the positive responses to three questions and in the case of fourth question (capacity utilisation) an average of sum of the responses to improvement and no improvement is taken. Then BCI is compared with the base value to know the change. If the BCI increases for a particular round it is due to the larger proportion of positive responses in that round. The positive responses may increase for a specific question. An increase in the level of BCI reflects optimism in the business sector on the performance of the economy.
NCAER the National Council of Applied Economic Research is India’s oldest and largest independent economic think-tank set up in 1956 at the behest of Prime Minister Jawaharlal Nehru to inform policy choices for both the public and private sectors. Over nearly six decades NCAER has served the nation well with its rich offering of applied policy research unique data sets evaluations and policy inputs to central and state governments corporate India the media and informed citizens. It is one of a few independent think-tanks world-wide that combines rigorous economic analysis and policy outreach with data collection capabilities particularly for large-scale household surveys. NCAER is currently led by its Director-General Dr Shekhar Shah and governed by an independent Governing Body chaired by Mr Nandan M. Nilekani.
Dr Bornali Bhandari&Ms Shilpi Tripathi
NCAER| National Council of Applied Economic Research
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