NCAER, the National Council of Applied Economic Research, is privileged to present the 2013-14 Malcolm S. Adiseshiah Mid-Year Review of the Indian Economy for the third successive year in partnership with the India International Centre.
The Mid-Year Review highlights the policy flip-flops and paralysis that plagued policymaking in New Delhi in the run up to the elections and contributed to the slowdown in growth across the economy, especially in sectors like manufacturing, mining and energy.
NEW DELHI: Business confidence is on the upswing as companies are betting on a turnaround in the economy and improvement in the investment climate in the months ahead on the back of an expected reforms drive a survey by a think tank showed on Friday.
The survey by National Council of Applied Economic Research (NCAER) showed the business confidence (BCI) rose 13% in June quarter 2014 over 3.8% in the previous quarter.
Out of the four components of the BCI three showed improvement reflecting higher expectations of overall economic growth improvement in financial position of the firms and investment climate for the overall economy. The fourth component optimal capacity utilization showed a marginal decline the survey showed.
The political confidence index (PCI) in June quarter surged by 20% over April 2014. All eight components of PCI reflected higher optimism in this round.
The current survey was conducted just after the formation of a new government at the Centre with a single party getting majority of its own after three decades.
In June the government was getting ready to present its Budget. Hopes and expectations from the government were high given its emphasis on reviving economic growth the survey showed.
On the economic front inflation had showed some signs of moderating and industrial production was up especially in April and May. Exports also showed signs of improvement NCAER said in a statement. “However there was still a great degree of uncertainty regarding monsoon as El Nino was predicted around that time.”
The survey is based on a sample of 629 respondents. NCAER is the country’s oldest and largest independent economic think-tank set up in 1956.
All five major sectors of the economy show an improvement in business sentiments in the present survey over the last round. Although service sector firms have registered the highest BCI in terms of percentage change the manufacturing sector reflects higher optimism than service sector firms in the current survey.
It said the regional distribution of responses reflects mixed perceptions. Except the South the other three regions registered higher level of optimis
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About NCAER
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
Fellow &
Ms Shilpi Tripathi
NCAER| National Council of Applied Economic Research
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(T) : 011-2345-2605 (D) 011-2337-9861Email: stripathi@ncaer.org
HT Correspondent Hindustan Times New Delhi August 29 2014
First Published: 18:06 IST(29/8/2014) | Last Updated: 11:15 IST(30/8/2014)
The Indian economy expanded at its fastest pace in two-and-a-half years in the quarter ending June on the back of a turnaround in manufacturing as sentiment was boosted by the Narendra Modi government’s measures to help recover from the longest slump in a quarter of a century.
Data released on Friday showed gross domestic product (GDP) grew by a better-than-expected 5.7% in April-June sharply higher than 4.6% in the previous quarter signalling a revival in the economy.
Asia’s third-largest economy expanded by less than 5% for two straight years because of policy logjams project delays and a string of corruption scandals. But the government said the economy had turned the corner.
“With improvement witnessed in some important sectors including manufacturing as well as in the performance of exports along with the measures taken by the government the economy can be expected to show further improvement in the remaining part of the year” a finance ministry statement said.A slew of other data also pointed to better times for the country’s financial health.
Domestic passenger vehicles sales grew for the third month in a row in July signalling a revival in demand that began when excise duties were lowered during the interim budget last February.
The National Council of Applied Economic Research’s (NCAER’s) quarterly business confidence Index (BCI) — a measure to gauge economic sentiment — rose by 13% in June 2014 from April 2014.
Data released by the Central Statistics Office (CSO) showed that the manufacturing sector which accounts for about 15% of the economy grew by 3.5% in April-June — the fastest in nine quarters— compared with a contraction of 1.4% in the previous quarter and a decline of 1.2% in the year-ago period.
Farm output grew 3.8% compared with 4% in the same quarter last year but patchy monsoon rains could affect agricultural income hurting sales of consumer goods such as refrigerators and vehicles. Importantly low farm output could push up food inflation which is hovering around 10%.
Capital goods output a broad gauge of investment activity grew 13.9% in April-June compared to a contraction of 3.7% in the same period of the previous year in what could be a sign that companies are adding new capacities.
The slide in the services sector which accounts for more than two-thirds of the economy appears to have been arrested. The sector including construction grew by 6.8% in the April-June quarter higher than 5.8% in 2013-14.
All the major components of the services economy — hotels communication trade and hotels — have recorded growth rates higher than the previous year although they are still far lower than the decadal average.
Between 2004-05 and 2009-10 the services sector which accounts for more than two-third of the Indian economy grew at an average of more than 10%. This pulled the broader economy’s growth to more than 8% for all years except 2008-09 when a financial crisis roiled the world economy.
The Congress however said it was not impressed.
“For those who have consistently got over 8% growth of Indian economy year after year and whose lowest average is the highest than the NDA’s highest average rate of growth we are not impressed” party spokesman Abhishek Singhvi said.
NEW DELHI: Business confidence index continued to show upward trend for the quarter ended June 2014 on improving economic conditions and positive investment climate economic think-tank NCAER said today. The index rose by 17 per cent in June 2014 over April 2014 this year the think-tank said. “Out of the four components of BCI three showed improvement reflecting higher expectations of overall economic growth financial position of the firms and investment climate for the overall economy improved” the National Council of Applied Economic Research (NCAER) said in a release. However as per the Business Expectations Survey conducted by NCAER the marginally lower ratings on capacity utilisation remain an area of concern. Also the Political Confidence Index (PCI) for June quarter surged by 20 per cent over April 2014. All eight components of PCI reflect higher optimism in this round it said. NCAER said the regional distribution of responses reflects mixed perceptions and except the South the other three regions registered higher level of optimism. It said firms with an annual turnover between Rs 100-500 crore showed the highest percentage increase in confidence over the last round of survey. The distribution of firms by ownership type reveals improvement in both public and private sector firms in the present round of the survey. “Increases in production domestic sales exports and pre-tax profits are expected. There is also a positive outlook with respect to employment and wages. The prices of inputs as well as the ex-factory prices of outputs are slated to rise” it said. About PCI public sector firms registered falling confidence levels as against the positive outlook shown by private sector firms in terms of political management of economic policies. “Business plans for capacity expansion expanding into new lines of business and improvement of quality and efficiency depend heavily on favourable budget. There is anticipation of an increased tax rate in the budget of the new government” said the NCAER survey.