Mumbai: Sidbi and Crisil on Monday joined hands to launch sentiment index for micro, small and medium enterprises (MSME), which will indicate the current state and expected outlook on the sector every quarter.

The index, named as CriSidEx, is expected to provide crucial insights into employment, business environment and foreign trade in the MSME sector.

“Effective policy making is a function of the quality of information at hand and a leading indicator that reflects the business predicament and tidings of the MSME sector is crucial. The index is designed to do exactly that because it will gather real-time, ground-level information directly from the MSMEs," Crisil managing director and CEO, Ashu Suyash, said in a release.

Commenting on the development, Sidbi’s chairman and managing director, Mohammad Mustafa, said, “The index will allow stake-holders, especially policy makers, to take timely, even proactive steps, including those based on early warnings thrown up by the survey."

Every quarter, the index survey will cover over 1,000 MSMEs using a structured questionnaire to ensure consistency in methodology and capture information sans significant deviations. The sample will have representation based on size, geography and nature of business and across different legal entities.

It will help in forecasting the business environment as it will capture sentiment on various business parameters such as the business situation, capacity utilisation, order book and margins.

The index will flag potential headwinds and changes in production cycles and thus help improving market efficiencies. The results of the survey and the index levels will be published soon after every quarter. The first of these will be published in January 2018.