The significant improvement in the index this quarter has been led by a sharp improvement in the Expectation Index, as compared to the Current Situation Index, as firms appeared particularly upbeat about activity in their sectors.

The increase in the business sentiment this quarter has been backed by strong expectation of economic growth for the current fiscal year, with more than 60% of the firms expecting real GDP growth to range between 7-8% in FY17.

Also, business conditions are expected to improve as 61% of the firms expect an increase in sales in Apr-Jun 2016, as compared to only 42% who experienced the same in Jan-Mar 2016, while nearly two thirds of the firms (65%) anticipate an increase in new orders in Apr-Jun 2016, up from 40% who witnessed the same in the preceding quarter. Much of the recovery in business conditions is expected to be domestically driven as a majority of the firms (51.2%) expect to maintain status quo on their export orders in Apr-Jun 2016.

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