Fall in NCAER's business confidence index

By Our Special Correspondent

NEW DELHI, DEC. 5. The National Council of Applied Economic Research's (NCAER) business confidence index (BCI) fell to 103.6 in October this year, implying a reduction of 14.6 percentage points compared to its previous round. This is the second largest fall in the BCI in the last four years.

Among the companies covered by the survey, the proportion of those with a positive expectations on investment, capacity utilisation and financial position have continued to decline for the second quarter in succession since the last survey in July. But, in the current survey, the biggest fall is in the proportion of firms who expect overall economic conditions to be better in the next six months. In the July survey, such expectations were positive relative to the previous survey.

Meanwhile the NCAER has opposed the move to hike import duties to check imports from China.

Cautioning against panicking against the imports from China, the Council has said that during April-July this year, India's exports to China increased by 61.3 per cent over the same period of last year. On the other hand, imports from China increased by 28.3 per cent during the same months of the current year and despite this, the share of Chinese products in India's total import bill was only 2.74 per cent. The council has, in fact, suggested to the Government to concern itself more with the slow growth of non-oil imports this year rather than impose high tariffs on imports. The slower non-oil imports are an indication of slower economic growth, the Council has added.

According to NCAER, non-oil imports were doing better in the first quarter of the current fiscal compared to the performance in the same period of last year. This happened because of the increased imports of export-related items such as textile yarn fabrics and made ups, precious and semi-precious stones, chemicals and chemical products and leather and other goods like electronic goods, manufactures of metals and iron and steel.

Between April and June, about 40 per cent of imports were oil and related products and gold and silver. Imports of export related items were around 20 per cent and out of the remaining 40 per cent imports, the growth of major commodities was falling. For instance, capital goods imports declined by 17 per cent (with a 10 per cent share in imports), the NCAER has said.

However, non-oil imports have been sluggish when the first six months data are considered. Non-oil imports actually fell by 1.85 per cent to around $17.683 billion in the first six months compared to $18.016 billion in the same period last year.

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