Press Release: NCAER-NSE Business Expectations Survey for 2023–24:Q2

02 Nov 2023

Business sentiments rose in 2023–24:
Q2 as compared to last quarter


The National Council of Applied Economic Research (NCAER), one of India’s premier economic policy research think tanks, carried out the 126th Round of its Business Expectations Survey (BES) in September 2023, with support from the National Stock Exchange of India Limited (NSE). NCAER has been carrying out the BES every quarter since 1992, covering 500 firms across four regions.

There has been all-round improvement in business sentiments in this quarter.  The BCI rose from 128 in 2023–24:Q1 to 140.7 in 2023–24:Q2.   The BCI was also higher than the corresponding quarter in the previous year (132.5 in 2022–23:Q2).

The NCAER-NSE Business Confidence Index (BCI) is driven by four components, with each of them being assigned equal weights in the Index. The four components are ‘overall economic conditions will improve in the next six months’, ‘financial position of firms will improve in the next six months’, ‘present investment climate is positive’, and ‘present capacity utilisation is close to or above the optimal level’.  The share of positive responses was higher for all four components of the BCI in 2023–24:Q2 compared to 2023–24:Q1.

Business sentiments were relatively more buoyant about domestic markets than external markets.  The share of firms expecting production, domestic sales and pre-tax profits to increase was more in 2023–24:Q2 compared to 2023–24:Q1. In contrast, a lower percentage of firms expected exports of own products and imports of raw materials to increase in 2023–24:Q2 compared to 2023–24:Q1.

Regarding expectations about future price trends, sentiments were muted for both prices of inputs and outputs with a lower percentage of firms expecting prices to rise in 2023–24:Q2 over 2023–24:Q1. The share of firms expecting a rise in the unit cost of raw materials, electricity and labour in the next six months decreased between the two periods. Similarly, the percentage of firms expecting their ex-factory prices to rise came down in 2023–24:Q2 over 2023–24:Q1.

The latest BES Report can be accessed and downloaded from here.

Methodology: NCAER has been conducting the BES every quarter since 1991. The BES findings reported here relate to 500 firms. The survey elicits responses from firms across six cities to assess business sentiments in the four regions of India: Delhi-NCR, representing the North; Mumbai and Pune, the West; Kolkata, the East; and Bengaluru and Chennai, the South. All the industries are represented in terms of ownership type (including public sector, private limited, and public limited firms, partnerships/individually owned firms, and multinational corporations); the industry sector (including consumer durables, consumer non-durables, intermediate goods, capital goods, and services); and firm size based on the annual turnovers of the firms (in the range of less than or equal to ₹1 crore, more than ₹1 crore to less than or equal to 10 crore, more than ₹10 crore to less than or equal to ₹100 crore, more than ₹100 crore to less than or equal to 500 crore, and more than ₹500 crore). The sample is drawn randomly from a list of firms in each city. A sizeable number of units taken in one round are retained in the next round to maintain continuity of the analysis.

The BCI is computed on the basis of responses from firms to four questions. Two of these questions focus on macro factors and the other two on micro factors. All the questions carry equal weight. The BCI is a simple average of all the positive responses in the case of three questions, whereas in the case of the fourth question on capacity utilisation, an average of the sum of the responses indicating ‘improvement’ and ‘status quo’ is taken. Thereafter, the BCI is compared with the base value (denoted by the value of 100 in Round 7; 1993) to determine any change. An increase in the level of the BCI (signified by a larger share of positive responses) reflects optimism in the business sector about the performance of the economy.