The underlying business sentiment remains subdued for the second quarter of this calender year amid concerns about effective implementation of key economic reforms, says a Dun & Bradstreet study.
According to the research firm, the Business Optimism Index (BOI), which measures the pulse of the business community, stands at 126.8 for second quarter of 2015 (April-June), registering a decline of 2 percent from the previous three-month period.
“D&B Composite Business Optimism Index for Q2 2015 declined for the second consecutive quarter, on a y-o-y basis, as India Inc awaits greater traction in the implementation of key economic reforms,” Dun & Bradstreet President and Managing Director-India, Kaushal Sampat said.
Based on the responses received, it was observed that four out of the six optimism indices — volume of sales, net profits, selling prices and employee levels — have registered a decrease as compared to first quarter of 2015.
“Business sentiment continues to be plagued by economic uncertainty and this is reflected in the steep fall in optimism with regard to net profits for the second quarter of 2015,” Sampat added.
According to D&B, the political constraints have resulted in a slower legislative passage of key bills, causing business sentiment to drift lower with regard to the forthcoming quarter.
“Going forward, effective implementation of various measures announced in the Budget and improvement in the efficiency of monetary policy transmission would play a crucial role in reviving business sentiment” he added.
For calculating the composite BOI, each of the six parameters — net sales, net profits, selling prices, new orders, inventories and employee levels — is assigned a weight.
The parameter weights are then applied to these ratios and the results aggregated to arrive at the Composite Business Optimism Index.