Feb 5: Ratings agency and SIDBI have jointly launched India’s first sentiment index for micro and small enterprises (MSEs).
It is a composite index based on a diffusion index of 8 parameters, and measures MSE business sentiment on a scale of 0 (extremely negative) to 200 (extremely positive). The parametric feedback was captured through a survey of 1,100 MSEs in November-December.
The first reading of CriSidEx stood at 107, indicating mildly positive sentiment during October-December (or the ‘survey quarter’). For January-March 2018 (or the ‘next quarter’), the sentiment is expected to be more positive.
Says Mohammad Mustafa, Chairman and Managing Director, SIDBI, “CriSidEx captures the sentiment of MSEs very well, and therefore would do two crucial things: be an accurate barometer of on-the-ground trends – given that not much statistical light emanates now from MSE geographies – and play an important role in addressing financial and developmental gaps in the MSE ecosystem.”
CriSidEx will have 2 indices – one for the ‘survey quarter’ and another for the ‘next quarter’ once a trend emerges after few rounds of the survey, providing independent time series data.
The crucial benefit of CriSidEx is that its readings will flag potential headwinds and changes in production cycles, and thus help improve market efficiencies. And by capturing the sentiment of exporters and importers, it will also offer actionable indicators on foreign trade.
Says Ashu Suyash, Managing Director & CEO, CRISIL Ltd, “The survey tells you that MSEs expect a distinct improvement in business sentiment. That would be in alignment with our macro reading, where we expect GDP growth to be better during the December 2017 and March 2018 quarters because of low-base effect and GST glitches being sorted out.”
More than half of the respondents expected an improvement in their business situation during the January-March quarter compared with a third in October-December.
Between manufacturing and services, the sentiment was more positive in manufacturing, with more than half of the MSEs expecting faster growth in orders and improved capacity utilisation in January-March compared with less than a third in October-December.
Exporters, too, were hopeful of business improving in January-March, with a third of them expecting an above-normal orderbook compared with less than a quarter in October-December. On the other hand, more than half of the domestic-focussed MSEs foresaw improved orderbook in January-March.
CRISIL also interacted with lenders for their views on the MSE sector. For the next quarter, lenders held a favourable view, expecting overall business situation to improve.