Reflecting an improvement in perception regarding overall economic conditions and amidst indications of a normalisation in business situation post the recent disruptions, companies are optimistic that economic growth would gain traction during the third quarter of FY18. CII’s 101st edition of quarterly Business Confidence Index has climbed up to the level of 59.7 during Oct-Dec 2017 as against 58.3 in the previous quarter.

1. 101st Business Outlook Survey
December 2017

2. 101ST BUSINESS OUTLOOK SURVEY
1Highlights
101ST BUSINESS OUTLOOK SURVEY
(October-December 2017)
HIGHLIGHTS
The CII Business Confidence Index (CII- BCI) for Oct-Dec 2017 quarter improved to 59.7 from the level
of 58.3 in the previous quarter, indicating an uptick in confidence.
Half the respondents (50 percent) expect GDP growth to exceed 6.5% in 2017-18.
Majority of the respondents (51 percent) expect retail inflation to range between 4.0-5.0% in 2017-18.
More than half of the respondents (51 percent) expect policy rates to remain unchanged in the next
monetary policy review.
Most of the respondents (88 percent) anticipate that the government will overshoot the fiscal deficit
target in 2017-18.
Majority of the respondents (53 percent) feel that the CAD will lie in the range of 1.5-2.5% of GDP in
2017-18.
Nearly four out of five respondents (79 percent) feel that GST payment will become hassle free by Q1
2018-19.
Nearly two thirds of the respondents foresee a continued increase in sales and new orders in Oct-Dec
2017 quarter.
Nearly half of the respondents (49.4 percent) expect capacity utilization in the 75-100% range in the
Oct-Dec 2017 quarter.
Major share of the respondents anticipate to maintain status quo on investments in Oct-Dec 2017
quarter.
Majority of the firms anticipate their expenditure to remain unchanged in the Oct-Dec 2017 quarter.
More than half of the respondents (54.5 percent) expect the profits to increase in Oct-Dec 2017 quarter.
Major proportion of the respondents anticipate status quo on the external trade front in the Oct-Dec
2017 quarter.
More than half of the respondents (55 percent) consider low domestic demand and high commodity
prices to be the top concerns this quarter.

3. 101ST BUSINESS OUTLOOK SURVEY
2Business Confidence Index
BUSINESS CONFIDENCE INDEX
The CII Business Confidence Index (CII- BCI) for October-December 2017 quarter posted a recovery, climbing
to the level of 59.7 from 58.3 recorded in the previous quarter. Though the index had recorded a fall in the
previous quarter, sliding to the level of 58.3 in Jul -Sep 2017 from 64.4 in Apr-Jun 2017, the recovery recorded
in this quarter (Oct-Dec 2017) is indicative of the improvement in the business environment, post the
implementation of GST.
The respondents in the survey were asked to provide a view on the performance of their firm, sector and the
economy based on their perceptions about the previous and current quarter. The CII-BCI was then constructed
as a weighted average of the Current Situations Index (CSI) and the Expectation Index (EI).
It is pertinent to note that the recovery in the BCI was mainly driven by the improvement in the EI while the
CSI remained at about the same level as the previous quarter. The uptick in EI was mainly driven by
expectations of an improvement in activity in the firm’s own sector.
QuarterlyBusinessConfidenceIndex(BCI)
Index
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
Business Confidence Index 56.2 56.4 54.4 53.4 53.9 54.1 57.2 58.0 56.5 64.1 64.4 58.3 59.7
Current Situation Index 53.5 53.5 52.2 49.3 50.7 50.7 52.3 54.5 57.2 58.5 58.7 54.9 54.7
Overall Economy 55.0 54.3 54.8 48.6 50.2 52.0 54.9 55.9 56.7 54.4 58.2 54.8 53.1
Own Activity Sector 49.4 52.7 48.3 45.4 48.8 47.6 48.1 49.6 54.1 56.7 56.2 54.5 52.4
Own Company 55.8 53.8 54.0 52.1 52.2 52.3 54.2 57.3 59.5 61.0 60.5 55.1 56.8
Expectation Index 57.6 57.8 55.4 55.5 55.5 55.9 59.7 59.8 56.1 66.9 67.3 60.0 62.2
Overall Economy 59.2 58.1 57.9 54.0 56.2 57.5 60.6 59.6 53.5 66.0 67.9 60.7 61.4
Own Activity Sector 54.5 57.5 51.8 53.3 55.0 52.2 58.0 56.9 52.2 65.3 64.7 57.8 60.5
Own Company 59.1 57.9 57.1 57.5 55.5 57.8 60.4 61.7 59.5 68.2 68.8 61.3 63.6
* The Survey is conducted on a quarterly basis since the 74th Business Outlook Survey
40
45
50
55
60
65
70
Q2FY13
Q3FY14
Q4FY14
Q1FY15
Q2FY15
Q3FY15
Q4FY15
Q1FY16
Q2FY16
Q3FY16
Q4FY16
Q1FY17
Q2FY17
Q3FY17
Q4FY17
Q1FY18
Q2FY18
Q3FY18
101st Business Outlook Survey
BCI CSI EI
58.3
54.9
6059.7
54.7
62.2
Business
Confidence Index
Current Situation
Index
Expectation Index
101st Business Outlook Survey
Q2FY18 Q3FY18

4. 101ST BUSINESS OUTLOOK SURVEY
3General Economic Prospects
GENERAL ECONOMIC PROSPECTS
GDP GROWTH
Major proportion of the respondents (40 percent) foresee GDP growth in the 6.5-7.0% range in 2017-18.
About 50 percent of respondents expect GDP growth to exceed 6.5% in 2017-18. Of these, a large share of 40
percent anticipate GDP growth to range between 6.5-7.0% in 2017-18. This is closely in line with the growth
forecast by the central bank and various other international organizations like WB, IMF and ADB.
Given the recent pick-up in economic activity, with GDP growth improving to 6.3% y-o-y in Q2 2017-18, it is
expected that the economic recovery will continue in the coming quarters.
INFLATION
Majority of the respondents (51 percent) expect retail inflation to range between 4.0-5.0% in 2017-18.
More than half of respondents anticipate inflation to range between 4.0-5.0% in 2017-18, while close to 24
percent of respondents expect it to be in the 3.0-4.0% range and 23 percent feel that it will lie in the 5.0-6.0%
range in the current fiscal. So far this year, consumer price inflation has averaged around 2.7% y-o-y in the Apr-
Oct period, however, given the recent rise in global oil prices and the consistent increase in inflation since June
2017 there is an imminent upwards pressure on prices.
<6.0%
22%
6.0%-6.5%
28%
6.5%-7.0%
40%
7.0%-7.5%
9%
7.5%-8.0%
1%
>8.0%
0%
Expected GDP Growth in 2017-18
(% of Respondents)

5. 101ST BUSINESS OUTLOOK SURVEY
4General Economic Prospects
RBI POLICY RATE
More than half of the respondents (51 percent) expect policy rates to remain unchanged in the next monetary
policy review.
Majority of the respondents (51 percent) feel that the central bank will maintain status quo on policy rates in the
upcoming monetary policy review meeting on 5th
and 6th
December, 2017. The expectation in highly in-line with
the conservative stance previously indicated by the central bank owing to the renewed upward pressure on prices.
<3.0%
1%
3.0-4.0%
24%
4.0-5.0%
51%
5.0-6.0%
23%
>6.0%
1%
Expected rate of Retail Inflation in 2017-18
(% of Respondents)
No
51%Yes, cut by 25 bps
37%
Yes, cut by 50 bps
3%
Yes, increase by 25 bps
9%
Yes, increase by 50 bps
0%
Expected change in Policy rates
(% of Respondents)

6. 101ST BUSINESS OUTLOOK SURVEY
5General Economic Prospects
FISCAL DEFICIT
Most of the respondents (88 percent) anticipate that the government will overshoot the fiscal deficit target in
2017-18.
Nearly nine out of ten respondents (88 percent) feel that the government is will not meet its fiscal deficit target
of 3.2% of GDP in 2017-18 and will overshoot the same. Among these respondents, 46 percent feel that the
fiscal deficit will be in the range of 3.2-3.5% (of GDP) while 32 percent feel that it will lie in the 3.5-3.8% range
and 10 percent anticipate the fiscal deficit to cross the 3.8% mark. The responses are highly in-line with the
fact that the fiscal deficit has already crossed 96% of the budget target for this financial year in only 7 months.
On the other hand, only 12 percent of the respondents are of the view that the government will be successful
in limiting the fiscal deficit below 3.2% of GDP.
CURRENT ACCOUNT DEFICIT (CAD)
Majority of the respondents (53 percent) feel that the CAD will lie in the range of 1.5-2.5% of GDP in 2017-18.
More than half of the respondents (53 percent) feel that the CAD will range between 1.5-2.5% of GDP in 2017-
18, out of which 31 percent feel that the CAD will lie in the 2.0-2.5% range while 22 percent expect it to fall in
the 1.5-2.0 percent range. Following closely, 21 percent of respondents feel that the CAD will range between
2.5-3.0% of GDP.
CAD stood at 0.7% of GDP in 2016-17, however in Q1 2017-18 CAD was recorded at 2.4% of GDP as the growth
in imports has outpaced exports, leading to a wide trade deficit.
12%
46%
32%
10%
<3.2% 3.2-3.5% 3.5-3.8% >3.8%
Expected Fiscal Deficit( as a % of GDP)
(% of Respondents)

7. 101ST BUSINESS OUTLOOK SURVEY
6General Business Prospects
GOODS AND SERVICES TAX
Nearly four out of five respondents (79 percent) feel that GST payment will become hassle free by Q1 2018-19.
Cumulatively, majority of the respondents (79 percent) feel that GST payment will become hassle free by the
first quarter of the next fiscal year, around 1 year after the implementation of the historic tax reform. Among
the respondents, 28 percent feel that the implementation issues would end by Q1 2018-19 while 21 percent
expect it to end by the last quarter of this fiscal year (2017-18).
GENERAL BUSINESS PROSPECTS
CAPACITY UTILISATION
Nearly half of the respondents (49.4 percent) expect capacity utilization in the 75-100% range in the Oct-Dec
2017 quarter.
Around 50 percent of respondents feel that capacity utilization will lie in the 75-100% range in Oct-Dec 2017
quarter as against 29.3 percent of respondents who witnessed the same in the Jul-Sep 2017 quarter. It is
4%
14%
22%
31%
21%
7%
<1% 1-1.5% 1.5-2.0% 2.0-2.5% 2.5-3.0% >3.0%
Expected Current Account Deficit ( as a % of GDP)
(% of Respondents)
13%
16%
21%
28%
11% 10%
Q2 FY18 Q3 FY18 Q4 FY18 Q1 FY19 Q2 FY19 After Q2 FY19
Expected hassle-free GST Payments
(% of Respondents)

8. 101ST BUSINESS OUTLOOK SURVEY
7General Business Prospects
interesting to note that a majority of the respondents (50 percent) are anticipating capacity utilization in the 75-
100% range even though a major share of them (40.8 percent) experienced capacity utilization levels of 50-75%
in the Jul-Sep 2017 quarter.
INVESTMENT PLANS
Major share of the respondents anticipate to maintain status quo on investments in Oct-Dec 2017 quarter.
Major proportion of the firms plan to keep their investment plans on hold in the Oct-Dec 2017 quarter. Around
46 percent of the respondents anticipate no change in their domestic investment intentions while nearly 60
percent plan to keep their international investments on hold in the Oct-Dec 2017 quarter.
Despite the expectations of an improvement in sales and new orders in the Oct-Dec 2017 quarter, firms are
maintaining status quo on their investment plans owing to the excess capacity existing in the economy.
28.7
40.8
29.3
1.3
16.7
30.8
49.4
3.2
Below 50% 50-75% 75-100% Above 100%
Capacity Utilization
(% of Respondents)
Actual (Jul-Sep 2017) Expected (Oct-Dec 2017)
19.2
34.6
46.2
20.5 20.5
59.0
Decline Increase No change Decline Increase No change
Domestic Investments International Investments
Investment Plans for Oct-Dec 2017
(% of Respondents)

9. 101ST BUSINESS OUTLOOK SURVEY
8Overall Trends
OVERALL TRENDS
OVERALL SALES & NEW ORDERS
Nearly two thirds of the respondents foresee a continued increase in sales and new orders in Oct-Dec 2017
quarter.
Around 63 percent of the respondents feel that sales will continue to increase in the Oct-Dec 2017 quarter after
44 percent of them experienced the same in the previous quarter. Further, a continued improvement in new
orders, in the Oct-Dec 2017 quarter, is anticipated by 61 percent of respondents after 41 percent of them
experienced the same in the previous quarter.
EXPENDITURE
Majority of the firms anticipate their expenditure to remain unchanged in the Oct-Dec 2017 quarter.
More than half of the firms foresee no change in their electricity & fuel costs (57.2 percent), wages and salaries
(51.4 percent) and credit cost (53.7 percent) in the Oct-Dec 2017 quarter. Additionally, a large proportion of
respondents (44.3 percent) expect to see no change in their raw material costs in the said quarter even though
nearly 48 percent of them experienced an increase in raw material costs in the previous quarter.
24
44
32
23
41
35
12
63
25
13
61
27
Decline Increase No change Decline Increase No change
Sales Count of New Orders
Overall Sales & New orders
(% of Respondents)
Actual Q2 FY18 (Jul-Sep 2017) Expected Q3 FY18 (Oct-Dec 2017)

10. 101ST BUSINESS OUTLOOK SURVEY
9Overall Trends
PROFITS AFTER TAX
More than half of the respondents (54.5 percent) expect the profits to increase in Oct-Dec 2017 quarter.
Majority of the respondents (55 percent) foresee an increase in Profits after Tax (PAT) in the Oct-Dec 2017 quarter
while only 35.3 percent of them witnessed the same in the previous quarter. This could be attributed to the belief
that costs will remain largely unchanged in the Oct-Dec 2017 quarter, hence the increase in profits.
It is interesting to note that a majority of respondents expect an improvement in PAT despite the fact that a major
share among them (39.2 percent) witnessed a decline in PAT in the previous quarter.
9.4 13.0
5.0 5.8 4.1 4.3
12.3 17.9
47.8 42.7
46.8
37.0
54.1
44.3 32.6
28.4
42.8 44.3 48.2
57.2
41.9
51.4 55.1 53.7
Actual Q2 FY18
(Jul-Sep 2017)
Expected Q3
FY18 (Oct-Dec
2017)
Actual Q2 FY18
(Jul-Sep 2017)
Expected Q3
FY18 (Oct-Dec
2017)
Actual Q2 FY18
(Jul-Sep 2017)
Expected Q3
FY18 (Oct-Dec
2017)
Actual Q2 FY18
(Jul-Sep 2017)
Expected Q3
FY18 (Oct-Dec
2017)
Total Raw Material Cost Electricity and Fuel Cost Wages and Salaries Cost of Credit
Input Cost
(% of Respondents)
Decline Increase No change
39.2
35.3
25.5
18.5
54.5
27.0
Decline Increase No change
Profits after Tax
(% of Respondents)
Actual Q2 FY18 (Jul-Sep 2017) Expected Q3 FY18 (Oct-Dec 2017)

11. 101ST BUSINESS OUTLOOK SURVEY
10Business Concerns
EXPORT AND IMPORT
Major proportion of the respondents anticipate status quo on the external trade front in the Oct-Dec 2017
quarter.
Nearly half of the respondents (47 percent) feel that their exports orders will remain unchanged in the Oct-Dec
2017 quarter, while around 56 percent of them experienced the same in the previous quarter. On the imports
front as well, about 62 percent of the respondents anticipate no change in their import orders, slightly lower than
68 percent of the respondents who experienced the same in the previous quarter.
BUSINESS CONCERNS
More than half of the respondents (55 percent) consider low domestic demand and high commodity prices to
be the top concerns this quarter.
24.6
19.6
55.8
16.2 16.2
67.6
16.9
36.2
46.9
16.5
21.3
62.2
Decline Increase No change Decline Increase No change
Exports Imports
Exports and Imports
(% of Respondents)
Actual Q2 FY18 (Jul-Sep 2017) Expected Q3 FY18 (Oct-Dec 2017)
9.7
16.8
18.5
25.2
29.9
0 10 20 30 40
Upward risk to food inflation
High borrowing cost
Fragile global economic recovery
High commodity prices
Low domestic demand
Top business concerns
(% of Respondents)

12. 101ST BUSINESS OUTLOOK SURVEY
11Coverage & Methodology
COVERAGE & METHODOLOGY
CII’s 101st
Business Outlook Survey is based on sample survey of firms covering all industry sectors, including micro,
small, medium and large enterprises from different regions. The survey also enumerated responses across
industry groups both in public and private sectors engaged in manufacturing and services sector.
The survey was conducted from October-December 2017, covering more than 170 firms of varying sizes. Majority
of the respondents (36 per cent) belonged to small-scale firms, while 31 per cent were from large-scale firms and
24 per cent and 10 per cent were from medium scale and micro firms, respectively. Sectoral break up shows that
66 percent of the respondents represented the industrial sector while 32 per cent were from services sector and
2 per cent from primary sector, respectively.
CII-BCI is calculated as a weighted average of the Current Situation Index (CSI) and the Expectation Index (EI), with
greater weight given to EI as compared to CSI. These indices are based on questions pertaining to performance of
the economy and the respondents’ sector and firm. Respondents are asked to rate the current and expected
performance on a scale of 0 to 100. A score above 50 indicates positive confidence while a score above 75 would
indicate strong positive confidence. On the contrary, a score of less than 50 indicates a weak confidence.

13. 101ST BUSINESS OUTLOOK SURVEY
12Coverage & Methodology
The Confederation of Indian Industry (CII) works to create and sustain an environment conducive to the development of India,
partnering industry, Government, and civil society, through advisory and consultative processes.
CII is a non-government, not-for-profit, industry-led and industry-managed organization, playing a proactive role in India's
development process. Founded in 1895, India's premier business association has over 8,300 members, from the private as
well as public sectors, including SMEs and MNCs, and an indirect membership of over 200,000 enterprises from around 250
national and regional sectoral industry bodies.
CII charts change by working closely with Government on policy issues, interfacing with thought leaders, and enhancing
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The CII theme for 2017-18, India Together: Inclusive. Ahead. Responsible emphasizes Industry's role in partnering
Government to accelerate India's growth and development. The focus will be on key enablers such as job creation; skill
development and training; affirmative action; women parity; new models of development; sustainability; corporate social
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With 66 offices, including 9 Centres of Excellence, in India, and 10 overseas offices in Australia, Bahrain, China, Egypt, France,
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