India Business Confidence Hits Multi-Quarter High for Q2FY27: Rediff Moneynews

New Delhi, Sep 7 (PTI) India Inc is optimistic about the second quarter of FY27 as disruptions from the West Asia crisis ease gradually and economic momentum is expected to sustain, with the CII Business Confidence Index for April-June rising to 66.0 from 60.8 in the preceding quarter, signalling broad-based improvement in business expectations.

Chandrajit Banerjee, Director General, CII, said: “The optimism shown by businesses, as reflected in the BCI, is a clear testament to the inherent resilience of the Indian economy even as the geopolitical uncertainty continues. The steady improvement in business activity, backed by robust domestic demand and stable macroeconomic indicators, reinforces the perception that the government’s facilitative policies will support a faster expansion in output and new orders, creating fresh opportunities for firms in India and abroad.”

The findings are based on the 136th Round of CII’s Quarterly Business Outlook Survey, which garnered responses from over 240 companies across sectors, regions and firm sizes.

The survey findings come at an important moment for the economy.

The latest estimates by MoSPI (the Ministry of Statistics and Programme Implementation) showed that India’s real GDP grew by 7.8 per cent in the first quarter of the current fiscal year as compared to 6.9 per cent in the same quarter of the last fiscal.

The survey results reinforce that the better-than-expected GDP numbers are not merely statistical in nature but a real outcome of an on-ground boost in economic activity. While the manufacturing sector grew by 9.2 per cent in Q1FY27, services grew by 10 per cent during the corresponding period of last year.

“Industry sentiment has turned a corner, and this is no coincidence,” remarked Banerjee. “When business confidence, macroeconomic indicators and ground-level activity move in tandem, they point to a growth cycle that is increasingly broad-based, durable and sustainable.”

While both components of the BCI improved during the quarter, the increase was led primarily by a sharp rise in the Expectation Index (EI), highlighting growing confidence about future business prospects.

The EI climbed to 67.7 in Q2FY27 from 60.6 in Q1FY27, significantly outpacing the Current Situation Index (CSI), which increased more moderately to 62.6 from 61.2.

The widening gap between the two indices underlines the industry’s expectation that business conditions in the coming quarter will be appreciably stronger than those prevailing currently, as firms look beyond near-term challenges and anticipate a more favourable operating environment, CII stated.

Amidst clear indications that the economy is on a rising growth path, a significant 61 per cent of respondents expect domestic demand to rise in Q2FY27, building upon the broad-based gains seen in the quarter before.

Conversely, a mere 9.6 per cent foresee a moderation. This widening positive margin over the previous quarter signals sustained confidence in India’s growth story, CII said.

Furthermore, the share of firms expecting demand growth to exceed 20 per cent rose from 12.9 per cent in Q1FY27 to 16 per cent in Q2FY27, indicating that corporate optimism is not just holding firm, but actively intensifying at the upper end.

The strengthening demand outlook is expected to translate into higher capacity utilisation levels.

More than half of the respondents (51.6 per cent) expect their capacity utilisation to exceed 80 per cent in the second half of 2026, compared with 36.6 per cent in the first half. Sustained high levels of capacity utilisation could, in turn, spur fresh private sector investments in the coming quarters.

Meanwhile, while higher input costs continue to remain a concern, the intensity of cost pressures appears to be easing.

The share of respondents expecting costs to rise in Q2FY27 has moderated marginally to 61.1 per cent, from nearly two-thirds who reported higher costs in Q1FY27. This bodes well for corporate margins over the coming quarters.

This positive outlook is also translated into confident employment plans.

More than half of the respondents, or 53 per cent, expect to increase their workforce in Q2FY27. This suggests that even as firms are preparing for higher production and stronger demand, they remain confident about the medium-term business environment.

At the same time, businesses remain attentive to risks. Global trade uncertainty has been identified as the biggest risk over the next six months, followed by volatility in commodity prices.

These concerns, said CII, underline the need for continued policy support and close monitoring of global developments.

“Indian industry is entering the second half of the year with greater confidence. While external risks require continued attention, the underlying momentum remains encouraging”, opined Banerjee.

On balance, the message from across the economy is clear. Businesses are more confident, economic growth is strong, company earnings are improving, and investment plans are picking up. This suggests that India’s growth is becoming broad-based, giving industry greater confidence to create jobs, build capacities and plan ahead, CII said.