The National Council of Applied Economic Research (NCAER), one of India’s premier economic policy research think tanks, carried out the 122nd Round of its Business Expectations Survey (BES) in September 2022, 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.

The NCAER-NSE Business Confidence Index (BCI) has recovered from the lows of the pandemic year and is higher at 132.5 in 2022–23:Q2 than it was a year ago at 117.4 in 2021–22:Q2. There has been some softening of sentiments sequentially in the first and second quarters of 2022-23 compared 2021–22:Q4.

Sentiments on three of the four BCI components softened – namely, ‘overall economic conditions will be better in the next six months’, ‘present investment climate is positive’ and ‘present capacity utilisation is close to or above optimal level’. The share of positive responses remained virtually unchanged between this round and the previous one for one component, ‘financial position of the firms will improve in the next six months’.

Sentiments about production, domestic sales, exports, imports of raw materials and new orders softened in 2022–23:Q2 versus 2022–23:Q1, while expectations about ex-factory prices exhibited buoyancy. Despite a larger share of firms expecting ex-factory prices to rise, sentiments about pre-tax profits weakened. The waning of sentiments was relatively higher for external parameters compared to domestic ones.

Sentiments about increase in unit costs of raw materials and electricity in the next six months remained elevated but unchanged from the last round. However, the share of firms that expected higher unit costs of labour went up from 44.8% in 2022–23:Q1 to 51.4% in 2022–23:Q2.

Sentiments about hiring of workers over the next six months diverged with a higher share of firms reporting that they were likely to increase the hiring of unskilled or casual/temporary workers in this round compared to the last one. Sentiments about labour market for skilled or permanent workers were relatively muted.

Note: The bars in the graph represent error bars.

The latest BES Report can be accessed at the following link:

NCAER Business Confidence Index, 2019-20: Q2 to 2022-23:Q2

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