Finance Minister Arun Jaitley launched CriSidEx on 3rd of February 2018, which is India's first sentimental index for micro and small enterprises (MSEs). It was jointly developed by CRISIL and SIDBI, hence the name CriSidEx.
What is an Index?
An index is a statistical measure that shows changes in the value of something. NIFTY50 for example is a stock index that represents an average of top 50 Indian companies from 12 sectors listed on National Stock Exchange(NSE).
It is not the number represented by the index that is important but the change in the number as it gives you an overall idea on how the Indian companies listed on NSE are doing at that given moment.
What is a sentimental index?
Sentiment indicators are used by investors to see how optimistic or pessimistic people are to current market conditions.
What is CRISIL?
Credit Rating Information Services Of India Limited (CRISIL) is a credit rating agency (CRA) that gives ratings to individual and company debtors on their ability to pay back their interests and loan, conducts research and gives risk and policy advice to organizations. Standard & Poor's Financial Services LLC owns a major stake in CRISIL which is known for financial research and analysis on stocks, bonds and commodities world wide.
What is SIDBI?
Small Industries Development Bank of India (SIDBI) is a financial institution that aims at aiding growth and development of micro, small and medium-scale enterprises in India.
What is CriSidEx based on?
CriSidEx is based on diffusion index of 8 parameters. Diffusion index is a measurement that shows the percentage of parameters that have shown positive movement in a specific time frame.
The CrisSidEx measures MSE businesses on a scale on of 0 to 200, where 0 is extremely negative and 200 being extremely positive.
A survey was conducted on 1,100 MSEs between November and December to arrive at the parametric feedback.
The October to December quarter reading of CriSidEx stood at 107 which indicates mildly positive sentiments. CRISIL's website says that it is expecting a more positive result for the January to March 2018 quarter.
CriSidEx is calculated for every quarter (3 months) of the year. These are labeled as:
- 'survey quarter': the quarter preceding the current quarter
- 'next quarter': the current period that will be evaluated after a few rounds of survey
Types of Indices
There are 2 indices in CriSidEx, one is for the 'survey quarter' and the other is 'next quarter.'
Benefits of CriSidEx
CriSidEx's readings will help indicate any potential major changes in production cycles. This will hep improve market efficiencies. It also captures sentiments of importers and exporters offering a view on any actionable indicator in foreign trade.
Mohammad Mustafa, Chairman and Managing Director, SIDBI says, "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."