Improvement in business and political confidence

By agencies   |   Tuesday, 22 November 2005, 08:00 Hrs
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NEW DELHI: The Business Confidence Index for October 2005 gained 1.3 percent at 146.0, and factors like inflation did not have dampening effect on Political Confidence Index, which improved by 5.2 points at 109.2, economic think-tank NCAER has said.

The political Confidence Index reflects the business community's outlook with regard to the overall performance of the government and is affected by factors such as inflation, exchange rate and external trade negotiations, the NCAER said in its latest issue of 'Macrotrack'.

In comparison to the previous round, nearly two percent more firms were expecting sales to increase in the next six months and around one percent more firms expect raw material cost to increase in the next three months, it said.

However, the investment climate and capacity utilization received a marginally lower rating in this round. Investment climate declined from 69.7 to 55.5 and in case of capacity utilization, the index dropped from 95.8 to 69.0, NCAER said.

Barring the consumer durables and service sectors, the rest of the sectors exhibited strong positive sentiments, out of which the consumer non-durable sector witnessed the maximum gain followed by the capital goods sector, it said.

Nearly 69 percent of firms believe that capital market condition at present are better than a year ago period with 59 percent feeling that their ability to raise funds for new investment from capital market through equity has improved, it said.

The report highlighted that around 52.5 percent firms are considering brownfield projects and 15.7 percent are thinking about green field projects, while 31.8 percent are not thinking about any new investment plan.

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