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New government index to track corporate pulse

business Updated: Jul 06, 2012 00:06 IST
Mahua Venkatesh
Mahua Venkatesh
Hindustan Times
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The government, which has been struggling to make sense out of the economy’s ups and downs amid charges of a policy paralysis, is set to come up with a new yardstick to measure its health - a proposed National Business Index that would serve as a reference point on ground-level business performance of the corporate sector.

While the government uses price and production indices compiled by its own agencies, on performance, there are industry surveys that often reflect perceptions. The idea now is to measure both performance and their linkages to government policies.

The corporate affairs ministry is working on it and is currently examining the nuances involved in implementing such an index.

“We are already working on it and we want to bring out a composite index to analyse the business parameters in the country, the index would be based on actual and real performance indicators and not on sentiments or perceptions,” M Veerappa Moily, minister, corporate affairs, told Hindustan Times.

In essence, the government is looking for a corporate sector snapshot.

The planned index would capture relevant business yardsticks including turnovers, net profit, market capitalisation, sanctions and disbursements by lenders among other things. One of the main parameters would also be the companies' ability to generate employment.

Moily said that various stakeholders including industry chambers would be consulted once the broader contours of the index are finalised.

"We should be ready with it in the next few months. It is important to have an index since we have a lot of assessment-based on perceptions rather than real parameters," Moily said.

In the last few months, business sentiments and confidence among all stakeholders have taken a beating due to the government's inability to push through critical financial reforms. At the same time, inflation has been surging. What the government needs is an X-ray vision into the working of the corporate sector to see what it can and should do.