In the second quarter of the current fiscal year, business sentiment in India experienced a moderation after three consecutive quarters of improvement, amid significant global uncertainties, including new US tariffs, as reported by the latest Business Expectations Survey from the National Council of Applied Economic Research (NCAER). The quarter also witnessed changes in GST reforms and a reduction in tax rates, which are anticipated to impact the remaining two quarters. The Business Confidence Index (BCI) decreased to 142.6 in the second quarter of 2025-26 from 149.4 in the first quarter, although it was still higher than the 134.3 recorded in the same quarter of 2024-25.
The BCI is influenced by four key components: expectations for improvements in overall economic conditions and the financial position of firms over the next six months, the current investment climate, and present capacity utilization levels. The statement indicated that the decline in the BCI was primarily due to reduced sentiments in three of the four components, with the exception of present capacity utilization, which showed an improvement.