India's economy though showed signs of recovery in Q2FY18 but overall business sentiment in the country during the same period got hit by the new Goods and Services Tax (GST) regime. As per the National Council of Applied Economic Research’s (NCAER) latest survey, its Business Confidence Index (BCI) fell 12.9 % from the earlier quarter and 11.1% on year-on-year basis, due to GST.
The survey said that significant downturn in sentiment during the September quarter showed nervousness of corporate leaders around this new landmark change. It further pointed to the decline in Political Confidence Index (PCI) too. Its PCI index fell 12.4% on quarter on quarter basis. As per the report, Business Confidence Indices of the consumer durables and intermediate goods sectors witnessed 20.5% and 14.1%, drops respectively, on a quarter-on-quarter basis, while the confidence in consumer non-durables and capital goods sectors declined by 9.9% and 9.2%, respectively, on a quarter-on- quarter basis.
The survey result also pointed that the decline in BCI was driven by deterioration in sentiment in all the four components and that are-- overall economic conditions, financial position of firms, present investment climate and present capacity utilization and added that overall sentiment regarding production, domestic sales, export, imports of raw materials and pre-tax profit remained subdued in October versus July.