New Delhi: US-based research firm Dun and Bradstreet has projected sharp decline in business confidence in India for the first quarter of 2009, mainly on account of decreasing demand and erosion of profits.
“The increase in downside risks to growth prospects of the Indian economy, coupled with waning domestic and international demand, has hampered the business sentiment significantly,” it added.
It further said the demand conditions are expected to deteriorate significantly during the January-March 09 quarter, while the profit expectation has also plunged.
The external cues and policy actions taken by the government and their impact on the domestic demand conditions will play a key role in determining business expectations over the next quarter, it added.
The Business Optimism Index (BOI), which measures the pulse of the business community, decreased 31.1% for January-March, touching the lowest level since the introduction of the index by D&B seven years ago.
As compared to first quarter in 2008, the BOI declined by of 43.3%, the largest-ever fall in since 2002.
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.
It was observed that all the six optimism indices have declined as compared to the previous quarter, the release said.