NCAER Reports India BCI Rebounds to 107.8 in Q2 FY27

What happened

India’s business sentiment rebounded in the July–September quarter (Q2) of fiscal year 2026–27, breaking a streak of four consecutive quarters of decline ^[14]. According to the 138th round of the Business Expectations Survey (BES) released by the National Council of Applied Economic Research (NCAER), the Business Confidence Index (BCI) rose to 107.8 in Q2, up from 99.8 in the preceding quarter ^[2][14]. The survey gathered responses in September from 502 companies across six major commercial hubs: Delhi-NCR, Mumbai, Pune, Kolkata, Bengaluru, and Chennai ^[2][14].

All four constituent indicators of the BCI registered positive quarter-on-quarter growth ^[14]. The share of firms expecting overall economic conditions to improve over the next six months increased to 50 per cent from 43 per cent ^[2][14]. Expectations of improved financial positions rose to 41 per cent from 37 per cent, while those viewing the investment climate positively increased to 30 per cent from 26 per cent ^[2][14]. Additionally, the proportion of firms expecting capacity utilisation to remain near or above optimal levels climbed to 94 per cent from 91 per cent ^[2][14].

Why it matters

The recovery was broad-based, spanning across micro, small, and medium enterprises (MSMEs) and large firms alike ^[2][14]. The BCI for MSMEs increased from 93 to 100, while the index for large firms grew from 111.6 to 120.3 ^[2][14]. Furthermore, business prospects improved across both domestic and external markets, aided by a moderation in input cost pressures ^[2][14]. Expectations of rising raw material costs dropped to 60 per cent from 67 per cent, and electricity cost pressures fell to 33 per cent from 43 per cent ^[14]. Despite the sequential improvement from the previous quarter, the index remains lower than the 142.6 recorded during the corresponding quarter of the previous fiscal year ^[14].

What to watch

Observers will monitor whether the positive momentum in the BCI sustains through the second half of the fiscal year, particularly following the festive season. Key metrics to track in upcoming NCAER surveys include sustained improvements in capacity utilization, stability in raw material and utility costs, and actual realization of domestic and export sales projections.

Sources

1. Economic research says Indian business sentiment improved in 2nd Qrt of this fiscal | Akashvani News newsonair.gov.in
2. Indian Business Sentiment Rebounds in Q2 FY27 - newsorbiter.com