Dun & Bradstreet India Business Optimism Index down 5% QoQ in Jan-March qtr

The Dun & Bradstreet Composite Business Optimism Index stood at 89.9 for the January-March quarter, a decline of around 5.0 per cent compared to the October-December quarter survey. 

Four out of six optimism indices have registered a decline as compared to Q4 of calendar year 2021. The Business Optimism Index, which has been measuring the changing business sentiment of India Inc. since 2002, is an indicator for India’s overall growth with a correlation co-efficient of 80 per cent with the Gross Domestic Product (GDP).

Around 73 per cent of the respondents expect volume of sales to increase in the January-March quarter compared to 79 per cent in October-December quarter which is a decrease of 6 percentage points. Also, 62 per cent of the respondents expect an increase in net profit in Q1 (calendar year 2022), which is the same as in the previous quarter and 48 per cent expect no change in the selling price of products in January-March. 

However, 69 per cent of the respondents of the survey expect their order book position to improve in Q1 2022 (calendar year) compared to 79 per cent in Q4 of 2021 (calendar year), which is a decrease of 10 percentage points. 

Respondents to the survey also expect 37 per cent of their inventory level to increase during Q1 2022 (calendar year), compared to 38% in Q4 2021 (calendar year) and 49 per cent expect an increase in the size of their workforce employed during Q1 2022 (calendar year), the same as in Q4 2021 (calendar year). 

“The survey for Dun & Bradstreet Business Optimism Index was conducted in December 2021, when the Omicron variant was spreading faster, forcing countries to introduce mobility restrictions. The Index shows that the optimism level of India Inc. dropped in Q1 2022 (calendar year) after surging to an almost eight-year high in Q4 2021 (calendar year). Concerns that the new variant would restrain the revival in demand and slow down the recovery would have weighed upon the sentiment of businesses,” Dr. Arun Singh, Global Chief Economist at Dun & Bradstreet said. 

He added, “On a positive note, the optimism level was higher by 12.5 per cent compared to the same quarter last year. Nonetheless, the point of concern, as well as the focus, for the government and the Reserve Bank India (RBI) should be small businesses. There is a need to continue to extend the support measures, as our survey found that small businesses were the least optimistic across all the parameters, except for selling price, reflecting the difficult operating environment and market conditions under which they are working.”

Singh added that looking ahead, Dun & Bradstreet expects that the high vaccination rate will help states to withdraw all forms of restrictions, lending buoyancy to business optimism levels, although risks to businesses prevail from outflows of foreign investment, an increase in lending rates and slowdown in global growth.