Thaindian News

New Delhi, Oct 24 (IANS) The business confidence index (BCI) of small and medium enterprises will move up in the third quarter of this fiscal, a survey by the Confederation of Indian Industries (CII) said Sunday.

The BCI for the current quarter is estimated at 67 on a outlook scale of 0-100, moving from most favourable situation.

A value of 50 is the dividing line between favourable and unfavourable changes in the outlook. The outlook of this critical sector has improved over the last quarter by a significant 1.4 points, the second quarterly survey of CII said.

“This is a positive sign of a sector emerging from the shock of global economic meltdown, and having a huge employment potential,” CII director general Chandrajit Banerjee said.

The survey reveals that much of the buoyancy in the sector’s performance is due to the domestic demand rather than exports.

Export prospects for SMEs have come down significantly from the last quarter, which is not surprising given the slow and uncertain economic recovery in large part of the western globe.

Appreciating Indian rupee against US dollar is further adding to the woes of the SME exporters, the survey said.

The survey also reveals that the services sector on average are expecting to perform better than the industrial sector. Estimated BCI value of services SMEs stood at 67.5 compared to 66.5 for industrial SMEs.

The four variables highlighted by the survey that have done exceptionally well to cross the mark of 75 on BCI scale to indicate significantly better outlook of more than 10 percent from the previous quarter are gross sales, new orders, capacity utilization and capacity expansion.

Most of the other variables in the survey registered BCI values in the range of 51-75, indicating a favourable improvement of 1 to 10 percent in the outlook over the previous quarter.

The survey even showed that there has been improved outlook on the prospects of credit availability for SMEs, even though it continued to be stated as “most favourable”.