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THE ET-NCAER Business Expectations Survey attempts to capture the business expectations of industry captains. It is computed using responses from a broad sample of companies spread across regions, sectors and sizes. The survey was carried out by contracted agencies and NCAER field offices in October '08. The results are based on 508 responses. BCI has been computed from responses to questions based on four parameters.
The first is regarding respondents' expectations of overall macroeconomic conditions improving over the next six months. The second focuses on the respondents' expectations about financial position of companies over the next six months. These two capture macro-level factors. The third question captures respondents' perception about investment climate. The last query assesses whether capacity utilisation is close to or above optimal levels. These two reflect the current micro-level situation.
All four questions carry an equal weight in the index. BCI is based on the average proportion of positive responses compared to the base period, i.e. the first quarter of 1993-94. The index for the base period is set at 100.
A higher BCI reflects greater optimism regarding business and favourable climate for investments. A caveat added in interpreting BCI as an indicator of business outlook is that the change in its course should be sustained for at least two consecutive quarters.
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