Business Confidence Index (BCI) Dips in Q2 of 2024-25: Key Insights from NCAER-NSE Survey

Business Confidence Index (BCI) Dips in Q2 of 2024-25: Key Insights from NCAER-NSE Survey

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The Business Confidence Index (BCI), which gauges the growth prospects and sentiment of industries, saw a significant dip in the second quarter (Q2) of 2024-25. This comes after two quarters of improvement, highlighting concerns about the economic outlook.

About Business Confidence Index (BCI):

The Business Confidence Index (BCI) is a key economic indicator reflecting the level of confidence businesses have in the economy’s future performance.

The National Council for Applied Economic Research (NCAER) and the National Stock Exchange (NSE) release the Business Confidence Index (BCI) in India. The BCI is based on a quarterly survey of over 500 companies in six major cities in India. The survey covers a range of topics, including:

• Firm characteristics
• Expectations for changes in costs
• Labor employment and wages
• Inventories
• Prospects for sales, exports, and imports
• Profits 

The survey also includes a Political Confidence Index (PCI) that measures business confidence in India’s political management of economic policies.

The BCI is measured through four primary components:

Overall Economic Conditions: Businesses are surveyed on whether they expect the overall economic conditions to improve in the next six months. A decline in optimism was evident in Q2.

Firm’s Financial Position: Firms were asked about the prospects of their financial position improving over the next six months, with expectations showing a downward trend in Q2.

Present Investment Climate: Sentiment regarding the present investment climate was also part of the index, reflecting industry’s views on investment opportunities.

Capacity Utilisation: The survey also considered whether firms believed their capacity utilisation was close to or above the optimal level. A weaker response in this area contributed to the overall dip in confidence.

Economic Context and Outlook

The reversal of business confidence in Q2 can be attributed to growing concerns over macroeconomic factors, including inflation, global economic uncertainties, and domestic policy challenges.

While the BCI was on a growth trajectory in previous quarters, the sharp moderation signals caution among firms regarding the near-term economic outlook.

About National Council for Applied and Economic Research (NCAER):

Established in 1956, NCAER is India’s oldest and largest independent, non-profit, economic policy research institute. It is one of a handful of think tanks globally that combine rigorous analysis and policy outreach with deep data collection capabilities, especially for household surveys.