The significant uptick in the index, for the fourth consecutive quarter, is an indicator that business sentiment is upbeat.

On the inflation metric, a majority of respondents (60 per cent) anticipate the price rise to be within the range of 4.0-5.0% in 2018-19. It is interesting to note that the recent uptick in inflationary pressures has revised inflation expectations upwards since in the previous survey nearly 40 percent of the respondents anticipated inflation in the 4.0-5.0% range in 2018-19. Not surprisingly, a large share of respondents (42 per cent) anticipate a further increase in policy rates in 2018-19.

Also, business conditions are expected to improve as 64% of the firms anticipate an increase in sales in July-September 2018 after half of them experienced the same in the previous quarter. On similar lines, 61 per cent of the respondents anticipate an increase in new orders in the July-September 2018 which is higher than 55 per cent who witnessed the same in the preceding quarter. Much of the recovery in business conditions is expected to be domestically driven as a large proportion of firms (58%) expect to maintain status quo on their export orders in July-September 2018. Further, despite a rise in input costs, such as raw materials, fuel and wage expenditure anticipated to be incurred by firms, there are general expectations of elevated profits after tax during July-September 2018.

Around two-thirds of the firms (65 percent) anticipate an improvement in private sector investment activity in the remaining quarters of FY19. Of these, 26 per cent feel that an improvement in investment activity is already visible while the remaining 16 percent and 23 percent of the respondents anticipate a pick-up in the remaining two quarters of 2018-19.

There is widespread anticipation about a rise in capacity utilization within industry. Around 42 witnessed an increase in their capacity utilization levels over the last three months. Out of which around 30 percent witnessed a 0-10% increase in capacity utilization while 12 percent respondents witnessed an increase of more than 10%. This was closely followed by a similar proportion of respondents (41 percent) who experienced no change in capacity utilization levels. More than three out of four respondents feel that business environment has improved post the implementation of GST- particularly in terms of ease in paying taxes and transparency in the tax system.

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