In a first-of-its-kind initiative, the India Trade Promotion Organisation (ITPO) has commissioned the Indian Institute of Management, Ahmedabad (IIM-A) to construct a business confidence index and a consumer confidence index using data from ITPO’s exhibitions. It would include data also from the flagship annual two-week India International Trade Fair held in Delhi between November 14 and November 27.
ITPO chairman and managing director Rita Menon told HT in an interview that the index will likely evolve as a major metric to gauge consumer and business mood and serve as a powerful corporate strategy and a policy making tool.
A business confidence index (BCI) is a measure of the level of optimism among companies about the performance of the economy and how they feel about their company’s prospects.
The BCI survey also covers matters of importance to the business sector, including inflation figures and interest rates performance and expectations on sales figures and foreign investments, analysis of the labour supply and demand, topics of current interest concerning India’s economic and social situation.
Likewise, a consumer confidence index (CCI) is a measure of the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation.
For instance, people’s spending pattern is also a function of how confident they feel about their future income.
If consumer confidence is higher, consumers are making more purchases, boosting the economic expansion. On the other hand, if confidence is lower, consumers tend to save more than they spend.
“The objective is to ensure both indices evolve into useful tools for policy makers and corporate strategists to measure the health of the economy,” Menon said.