Business confidence index falls by 8 per cent

New Delhi, July 24 (UNI) The business confidence index (BCI) for April-June 2006 decreased by 8 per cent over it's previous round, and reached 141, the lowest since January 2005, according to a business survey.

''The ratings of the macro-economic indicators, including overall economic conditions and the investment climate, dropped to 66 and 66.5 respectively, which is 12.4 and 4.3 percentage points respectively over their previous levels,'' the survey said.

Among the firm level indicators, expectations regarding the financial positions exhibited a decline of 4 per cent while capacity utilisation showed a mild dip.

All the sectors had shown a drop in expectations. The extent of the decline in business expectations is very high in the capital goods sector (13 per cent), followed by intermediates (8 per cent) and consumer non-durables (6 per cent), an NCAER business expectation survey revealed. The expectative for services sector too have receded by 5 per cent over it's previous rounds.

Expansion of industrial activity in West Bengal exemplified by the proposed private sector investment in motor vehicles and retail businesses may have spurred the positive business sentiments there, and the regional index recorded about an 8 per cent rise over the prevous period.

The drop in business sentiments is reflected accross different types of ownership of firms. While the index for PSUs recorded was at 151.4, lower by 10.4 per cent in it's previous round, that of private limited and public limited companies declined by 7.4 and 6.4 per cent respectively over the levels in the previous rounds.

However, the most significant decline in business sentiments (-11.6 per cent) was observed for partnership/individual owners.

About 8.2 per cent of firms expect that domestic sales will rise during the next six months.

There is a sharp decline in political confidence index by 30.6 per cent catching the lowest in the last six months. The rating on all the components of the political index is lower.

The rankings of infrastructural services shows that power supply remained the greatest hurdle to output growth, followed by roads and telecom facilities. Firms report that a marked improvement has been observed in the last few years in telecommunication and postal/courier services.

Educationaal facilities are said to be the major constraint followed by sanitation and health facilities.

UNI ARB/DKS VJ RK2002