India's economic activity maintains dynamism but at a moderated pace in Q2 of 2024-25: NCAER-NSE survey

After improving for two consecutive quarters, business sentiments moderated in the second quarter of 2024-25 (134.3) compared to the first quarter (149.8) as well as the corresponding quarter of 2023-24 (140.7), according to the NCAER-NSE Business Expectations Survey for Q2 of 2024-25.

The BCI is based on four components- ‘overall economic conditions to improve in next six months’; ‘financial position of the firms will improve in next six months’; ‘present investment climate’; and whether ‘present capacity utilisation was close to or above optimal level’.

“While all four components of the BCI experienced slight moderation in sentiments between the first and second quarters of 2024–25, the percentage share of positive responses remained well above 50%, signalling continued economic dynamism,” said NCAER’s Prof Bornali Bhandari who led the survey.

The share of firms expecting ‘overall economic conditions to improve in next six months’ stood at 62.1 percent in the second quarter while that of firms expecting their own financial position to improve in the next six months was 58.0 percent.

The capacity utilisation was ‘close to or above optimal level’ for 96.3 percent of the surveyed firms in Q2.

According to the survey, the majority of respondents (67.1 percent of firms) expected production to increase in the next six months and 71.5 percent expected domestic sales to go up during the same period.

Similar trends were witnessed regarding ‘expected new orders’ over the next six months.

Sentiments about exports of final products continued to remain upbeat, even though a relatively smaller number of firms expected them to increase over the next six months.

The NCAER-NSE survey said that in case of sentiments about pre-tax profits, 61 percent of the surveyed firms expected them to rise, signalling continued buoyancy, though the number was slightly lower than the first quarter.

Likewise, a significant number of the firms also expected no changes in the unit costs of raw materials, electricity and labour, it said.

The survey was carried out in September 2024, covering 493 firms in six cities spread across all four regions of the country.