Industrial Outlook Survey of the Manufacturing Sector for Q2:2019-20 (Revised)

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வெளியிடப்பட்ட தேதி அக்டோபர் 04, 2019

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Industrial Outlook Survey of the Manufacturing Sector for Q2:2019-20 (Revised)

Today, the Reserve Bank released the results of the 87th round of the Industrial Outlook Survey (IOS) conducted during July-September, 2019. The survey encapsulates qualitative assessments of the business climate by companies in India’s manufacturing sector for Q2:2019-20 and their expectations for Q3:2019-20¹. Responses were received from 481 companies in this round of the survey.

Highlights:

Respondents assessed that there was a slump in order inflows, output and employment conditions in Q2:2019-20.
On exports and imports, there was waning optimism in Q2:2019-20.
Sentiments on the overall financial situation reflected lower optimism on availability of finance from internal accruals, bank finance and overseas sources in Q2:2019-20.
Cost pressures emanating from interest payments on borrowings, purchase of raw materials and salary expenses were assessed to have softened in Q2:2019-20, but manufacturers were pessimistic about profit margins in view of slack demand and negative sentiments on selling prices.
The Business Assessment Index (BAI)² fell sharply to 92.5 in Q2:2019-20 from 108.4 in Q1:2019-20.

Respondents expressed subdued optimism in Q3:2019-20 on demand parameters such as production, order books, employment and exports.
Optimism on the overall financial situation moderated on account of muted sentiments on availability of finance.
With moderation of optimism on selling prices and marginal edging up of cost of raw materials, manufacturers expect a downturn in profit margins in Q3:2019-20.
The Business Expectations Index (BEI) edged down from 112.8 in Q2:2019-20 to 102.2 in Q3:2019-20.

Summary Table Net responses³
(per cent)
Parameters	Assessment period		Expectations period
	Q1:2019-20	Q2:2019-20	Q2:2019-20	Q3:2019-20
Production	23.0	-1.9	29.1	13.9

Order Books	18.8	-2.8	20.5	13.9

Pending Orders	9.6	21.0	-6.7	14.4

Capacity Utilisation	9.4	-9.0	13.9	4.4

Exports	13.1	0.0	15.8	7.3

Imports	9.9	1.5	11.1	6.4

Employment	8.6	-0.9	10.9	0.7

Financial Situation (Overall)	21.1	-1.1	28.3	15.8

Availability of Finance (from internal accruals)	16.0	6.9	17.3	13.2

Availability of Finance (from banks and other sources)	11.9	4.3	13.0	12.7

Availability of Finance (from overseas, if applicable)	4.3	2.8	9.6	5.1

Cost of Finance	-17.6	-13.1	-15.4	-10.0

Cost of Raw Materials	-43.3	-35.3	-27.6	-30.8

Salary/ Other Remuneration	-37.2	-36.0	-33.7	-23.2
Selling Price	6.6	-7.6	7.1	4.6

Profit Margin	-8.0	-22.6	7.4	-8.5

Overall Business Situation	24.6	-0.8	35.2	21.7


Note: Please see the excel file for time series data

Table 1: Assessment and Expectations for Production
(Percentage responses)@
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	39.2	13.1	47.7	26.0	43.0	9.8	47.2	33.2
Q3:2018-19	1,267	38.2	13.3	48.5	24.9	41.6	9.0	49.4	32.5
Q4:2018-19	1,258	40.2	14.9	44.9	25.3	43.5	7.2	49.3	36.3
Q1:2019-20	1,231	38.6	15.6	45.8	23.0	42.1	9.3	48.5	32.8
Q2:2019-20	481	26.5	28.4	45.2	-1.9	40.1	11.0	48.9	29.1
Q3:2019-20						34.8	21.0	44.2	13.9
‘Increase’ in production is optimistic. @:Due to rounding off percentage may not add up to 100.

Table 2: Assessment and Expectations for Order Books
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	37.3	12.8	49.9	24.5	38.4	10.8	50.8	27.7
Q3:2018-19	1,267	35.3	15.8	48.9	19.5	38.6	9.6	51.8	28.9
Q4:2018-19	1,258	35.3	15.9	48.8	19.5	41.0	8.5	50.5	32.5
Q1:2019-20	1,231	34.1	15.4	50.5	18.8	38.5	8.6	52.8	29.9
Q2:2019-20	481	27.4	30.2	42.5	-2.8	31.6	11.1	57.3	20.5
Q3:2019-20						34.3	20.4	45.3	13.9
‘Increase’ in order books is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 3: Assessment and Expectations for Pending Orders
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above Normal	Below Normal	Normal	Net response	Above Normal	Below Normal	Normal	Net response
Q2:2018-19	1,095	7.2	13.2	79.7	6.0	6.3	10.7	83.0	4.4
Q3:2018-19	1,267	4.7	13.2	82.1	8.6	7.4	11.0	81.6	3.6
Q4:2018-19	1,258	5.1	14.3	80.6	9.2	6.3	9.9	83.8	3.6
Q1:2019-20	1,231	6.0	15.7	78.3	9.6	6.1	10.4	83.5	4.3
Q2:2019-20	481	4.5	25.5	70.0	21.0	16.1	9.4	74.5	-6.7
Q3:2019-20						3.9	18.3	77.8	14.4
Pending orders ‘Below Normal’ is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 4: Assessment and Expectations for Capacity Utilisation (Main Product)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	24.4	11.9	63.6	12.5	29.3	7.7	63.0	21.6
Q3:2018-19	1,267	24.9	12.3	62.8	12.6	28.3	7.3	64.4	21.0
Q4:2018-19	1,258	26.2	13.3	60.5	12.8	30.3	6.5	63.1	23.8
Q1:2019-20	1,231	22.8	13.4	63.8	9.4	27.2	7.7	65.1	19.6
Q2:2019-20	481	15.9	24.9	59.2	-9.0	23.1	9.2	67.7	13.9
Q3:2019-20						24.4	20.0	55.6	4.4
‘Increase’ in capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 5: Assessment and Expectations for Level of CU (compared to the average in last 4 quarters)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above Normal	Below Normal	Normal	Net response	Above Normal	Below Normal	Normal	Net response
Q2:2018-19	1,095	11.7	12.3	76.0	-0.6	11.8	9.3	78.9	2.5
Q3:2018-19	1,267	10.1	12.9	76.9	-2.8	12.5	9.1	78.4	3.4
Q4:2018-19	1,258	11.6	13.0	75.3	-1.4	12.7	8.6	78.7	4.1
Q1:2019-20	1,231	9.6	14.8	75.7	-5.2	12.2	8.2	79.6	4.0
Q2:2019-20	481	8.1	26.6	65.3	-18.6	9.2	8.8	82.0	0.3
Q3:2019-20						9.3	21.7	69.0	-12.4
‘Above Normal’ in Level of capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 6: Assessment and Expectations for Assessment of Production Capacity (with regard to expected demand in next 6 months)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	More than adequate	Less than adequate	Adequate	Net response	More than adequate	Less than adequate	Adequate	Net response
Q2:2018-19	1,095	11.2	7.2	81.6	4.0	11.3	6.0	82.7	5.2
Q3:2018-19	1,267	10.3	7.2	82.5	3.0	11.9	6.3	81.8	5.6
Q4:2018-19	1,258	11.2	7.4	81.4	3.8	10.6	6.1	83.3	4.5
Q1:2019-20	1,231	11.0	6.7	82.2	4.3	12.2	6.2	81.6	6.0
Q2:2019-20	481	15.1	14.2	70.7	0.9	13.5	6.9	79.6	6.6
Q3:2019-20						15.3	12.4	72.2	2.9
‘More than adequate’ in Assessment of Production Capacity is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 7: Assessment and Expectations for Exports
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	23.7	13.1	63.2	10.7	27.8	9.2	63.0	18.5
Q3:2018-19	1,267	25.1	13.0	61.9	12.1	26.1	10.2	63.7	15.9
Q4:2018-19	1,258	25.0	12.0	63.0	13.0	27.8	8.0	64.2	19.8
Q1:2019-20	1,231	24.6	11.5	64.0	13.1	25.7	8.0	66.2	17.7
Q2:2019-20	481	21.3	21.3	57.5	0.0	24.0	8.2	67.8	15.8
Q3:2019-20						24.3	17.0	58.7	7.3
‘Increase’ in exports is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 8: Assessment and Expectations for Imports
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	18.3	8.6	73.1	9.8	19.1	5.8	75.1	13.3
Q3:2018-19	1,267	20.1	8.5	71.4	11.6	19.3	7.1	73.6	12.2
Q4:2018-19	1,258	19.7	8.7	71.6	10.9	21.0	5.3	73.7	15.7
Q1:2019-20	1,231	18.2	8.3	73.4	9.9	19.2	6.2	74.6	13.0
Q2:2019-20	481	16.0	14.5	69.6	1.5	18.4	7.4	74.2	11.1
Q3:2019-20						18.1	11.7	70.2	6.4
‘Increase’ in imports is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 9: Assessment and Expectations for level of Raw Materials Inventory
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above average	Below average	Average	Net response	Above average	Below average	Average	Net response
Q2:2018-19	1,095	14.3	6.1	79.6	-8.2	11.0	5.2	83.7	-5.8
Q3:2018-19	1,267	14.3	4.6	81.0	-9.7	11.3	4.6	84.1	-6.7
Q4:2018-19	1,258	14.9	5.5	79.6	-9.5	12.1	4.2	83.8	-7.9
Q1:2019-20	1,231	13.9	5.7	80.4	-8.3	12.0	3.7	84.3	-8.3
Q2:2019-20	481	17.1	8.4	74.5	-8.6	11.8	4.2	84.0	-7.7
Q3:2019-20						13.2	6.6	80.3	-6.6
‘Below average’ Inventory of raw materials is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 10: Assessment and Expectations for level of Finished Goods Inventory
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Above average	Below average	Average	Net response	Above average	Below average	Average	Net response
Q2:2018-19	1,095	13.3	6.5	80.2	-6.9	9.9	5.0	85.1	-4.8
Q3:2018-19	1,267	15.0	4.9	80.1	-10.0	10.8	5.2	83.9	-5.6
Q4:2018-19	1,258	14.4	6.5	79.1	-7.9	11.1	4.6	84.3	-6.5
Q1:2019-20	1,231	13.5	6.7	79.8	-6.8	10.5	4.9	84.6	-5.6
Q2:2019-20	481	22.5	8.0	69.5	-14.5	13.0	6.0	81.0	-7.0
Q3:2019-20						15.7	5.0	79.3	-10.7
‘Below average’ Inventory of finished goods is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 11: Assessment and Expectations for Employment Outlook
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	16.2	7.8	76.1	8.4	17.6	4.7	77.7	12.9
Q3:2018-19	1,267	16.1	6.7	77.1	9.4	17.1	4.2	78.7	12.9
Q4:2018-19	1,258	16.7	6.9	76.5	9.8	17.0	4.8	78.2	12.2
Q1:2019-20	1,231	15.9	7.3	76.8	8.6	17.1	4.8	78.1	12.3
Q2:2019-20	481	13.4	14.2	72.4	-0.9	16.6	5.7	77.7	10.9
Q3:2019-20						12.1	11.4	76.5	0.7
‘Increase’ in employment is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 12: Assessment and Expectations for Overall Financial Situation
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Better	Worsen	No change	Net response	Better	Worsen	No change	Net response
Q2:2018-19	1,095	30.0	11.3	58.7	18.6	35.1	7.2	57.6	27.9
Q3:2018-19	1,267	28.5	11.9	59.6	16.5	34.4	7.5	58.0	26.9
Q4:2018-19	1,258	29.3	11.4	59.3	17.8	35.2	6.5	58.3	28.7
Q1:2019-20	1,231	29.7	8.6	61.7	21.1	35.0	5.7	59.3	29.3
Q2:2019-20	481	21.2	22.2	56.6	-1.1	34.3	6.1	59.6	28.3
Q3:2019-20						30.6	14.8	54.7	15.8
‘Better’ overall financial situation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 13: Assessment and Expectations for Working Capital Finance Requirement
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	30.4	5.5	64.2	24.9	30.8	4.5	64.7	26.3
Q3:2018-19	1,267	30.5	5.6	63.9	24.9	30.6	4.0	65.4	26.6
Q4:2018-19	1,258	30.8	4.6	64.6	26.2	29.9	4.4	65.7	25.6
Q1:2019-20	1,231	28.5	5.4	66.1	23.2	29.6	4.1	66.3	25.6
Q2:2019-20	481	28.4	10.7	60.9	17.7	27.7	5.5	66.8	22.1
Q3:2019-20						29.3	5.5	65.3	23.8
‘Increase’ in working capital finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 14: Assessment and Expectations for Availability of Finance (from Internal Accruals)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q2:2018-19	1,095	24.3	10.2	65.5	14.1	25.1	6.5	68.3	18.6
Q3:2018-19	1,267	21.2	10.4	68.4	10.8	24.9	6.7	68.3	18.2
Q4:2018-19	1,258	22.8	7.5	69.6	15.3	25.4	6.2	68.4	19.2
Q1:2019-20	1,231	23.2	7.2	69.6	16.0	25.5	5.0	69.5	20.5
Q2:2019-20	481	19.6	12.7	67.7	6.9	23.0	5.7	71.3	17.3
Q3:2019-20						21.4	8.1	70.5	13.2
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 15: Assessment and Expectations for Availability of Finance (from banks and other sources)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q2:2018-19	1,095	18.7	6.4	74.9	12.2	19.9	5.6	74.4	14.3
Q3:2018-19	1,267	17.2	6.0	76.8	11.2	19.0	5.9	75.1	13.1
Q4:2018-19	1,258	17.8	7.0	75.2	10.8	20.1	4.1	75.8	16.0
Q1:2019-20	1,231	17.9	6.0	76.1	11.9	19.3	5.0	75.7	14.2
Q2:2019-20	481	14.3	10.0	75.8	4.3	17.4	4.4	78.2	13.0
Q3:2019-20						18.7	6.0	75.3	12.7
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 16: Assessment and Expectations for Availability of Finance (from overseas, if applicable)
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Improve	Worsen	No change	Net response	Improve	Worsen	No change	Net response
Q2:2018-19	1,095	9.0	4.0	87.0	4.9	9.0	4.6	86.4	4.4
Q3:2018-19	1,267	6.9	4.0	89.1	2.9	9.5	4.3	86.2	5.2
Q4:2018-19	1,258	8.6	3.9	87.6	4.7	9.0	3.0	88.0	6.0
Q1:2019-20	1,231	8.2	4.0	87.8	4.3	9.5	3.5	87.0	6.0
Q2:2019-20	481	6.9	4.1	89.1	2.8	13.1	3.5	83.5	9.6
Q3:2019-20						9.2	4.1	86.7	5.1
‘Improvement’ in availability of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 17: Assessment and Expectations for Cost of Finance
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	25.7	6.4	67.9	-19.3	24.1	4.8	71.1	-19.3
Q3:2018-19	1,267	24.9	5.4	69.7	-19.5	24.7	4.9	70.4	-19.8
Q4:2018-19	1,258	21.3	5.6	73.1	-15.7	22.3	4.8	73.0	-17.5
Q1:2019-20	1,231	22.4	4.9	72.7	-17.6	20.2	5.8	74.0	-14.4
Q2:2019-20	481	21.3	8.1	70.6	-13.1	22.5	7.1	70.4	-15.4
Q3:2019-20						18.5	8.4	73.1	-10.0
‘Decrease’ in cost of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 18: Assessment and Expectations for Cost of Raw Materials
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	55.5	2.6	41.8	-52.9	46.2	2.8	50.9	-43.4
Q3:2018-19	1,267	53.1	3.9	43.1	-49.2	46.5	1.9	51.6	-44.5
Q4:2018-19	1,258	46.8	4.8	48.4	-41.9	42.1	3.5	54.3	-38.6
Q1:2019-20	1,231	46.4	3.1	50.5	-43.3	37.2	3.5	59.2	-33.7
Q2:2019-20	481	42.4	7.1	50.5	-35.3	31.4	3.8	64.8	-27.6
Q3:2019-20						37.0	6.2	56.8	-30.8
‘Decrease’ in cost of raw materials is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 19: Assessment and Expectations for Salary/Other Remuneration
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	35.5	2.0	62.5	-33.5	32.8	1.2	65.9	-31.6
Q3:2018-19	1,267	29.8	1.6	68.6	-28.2	25.6	1.2	73.2	-24.4
Q4:2018-19	1,258	28.5	1.8	69.7	-26.7	22.8	1.4	75.8	-21.4
Q1:2019-20	1,231	38.8	1.6	59.6	-37.2	34.0	1.1	64.9	-32.9
Q2:2019-20	481	38.6	2.6	58.8	-36.0	34.5	0.9	64.6	-33.7
Q3:2019-20						25.0	1.8	73.2	-23.2
‘Decrease’ in Salary / other remuneration is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 20: Assessment and Expectations for Selling Price
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	22.1	10.7	67.2	11.3	18.5	9.6	71.9	8.8
Q3:2018-19	1,267	19.9	13.7	66.4	6.2	21.0	6.7	72.3	14.3
Q4:2018-19	1,258	17.5	13.1	69.3	4.4	19.4	7.1	73.5	12.3
Q1:2019-20	1,231	17.1	10.5	72.4	6.6	19.5	8.5	72.0	11.0
Q2:2019-20	481	13.8	21.4	64.8	-7.6	15.5	8.4	76.1	7.1
Q3:2019-20						18.6	14.0	67.3	4.6
‘Increase’ in selling price is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 21: Assessment and Expectations for Profit Margin
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Increase	Decrease	No change	Net response	Increase	Decrease	No change	Net response
Q2:2018-19	1,095	14.3	26.5	59.2	-12.2	18.0	18.0	64.0	0.0
Q3:2018-19	1,267	16.1	27.8	56.1	-11.7	17.1	17.0	65.9	0.1
Q4:2018-19	1,258	16.2	25.5	58.3	-9.3	18.7	16.7	64.5	2.0
Q1:2019-20	1,231	16.1	24.1	59.8	-8.0	17.8	17.0	65.1	0.8
Q2:2019-20	481	13.5	36.1	50.4	-22.6	21.9	14.5	63.6	7.4
Q3:2019-20						17.6	26.1	56.3	-8.5
‘Increase’ in profit margin is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 22: Assessment and Expectations for Overall Business Situation
(Percentage responses)
Quarter	Total response	Assessment				Expectations
Quarter	Total response	Better	Worsen	No change	Net response	Better	Worsen	No change	Net response
Q2:2018-19	1,095	38.1	10.3	51.6	27.9	40.5	5.9	53.6	34.6
Q3:2018-19	1,267	34.9	10.3	54.8	24.6	43.3	7.0	49.8	36.3
Q4:2018-19	1,258	33.9	11.5	54.7	22.4	43.2	6.5	50.3	36.7
Q1:2019-20	1,231	35.1	10.5	54.4	24.6	42.5	5.6	51.9	36.9
Q2:2019-20	481	24.5	25.4	50.1	-0.8	41.1	6.0	52.9	35.2
Q3:2019-20						37.3	15.6	47.1	21.7
‘Better’ Overall Business Situation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 23: Business Sentiments
Quarter	Business Assessment Index (BAI)	Business Expectations Index (BEI)
Q2:2018-19	110.0	114.1
Q3:2018-19	107.1	115.0
Q4:2018-19	107.2	116.2
Q1:2019-20	108.4	113.5
Q2:2019-20	92.5	112.8
Q3:2019-20		102.2

¹ The survey responses are those of the respondents and are not necessarily shared by the Reserve Bank of India. The survey results of the 86th round (Q1:2019-20) were released on August 7, 2019 on the RBI’s website.

² For each of the survey round, two indices are computed - one based on assessment namely Business Assessment Index (BAI) and another based on expectations, namely Business Expectations Index (BEI). Each indicator for the respective period is calculated as a weighted (share of GVA of different industry group) net response of nine business indicators. The nine indicators considered are: (1) overall business situation; (2) production; (3) order books; (4) inventory of raw material; (5) inventory of finished goods; (6) profit margins; (7) employment; (8) exports; and (9) capacity utilisation. BAI/BEI gives a snapshot of the business outlook in every quarter and takes values between 0 and 200, with 100 being the threshold separating expansion from contraction.

³ Net Response (NR) is the difference in percentage of the respondents reporting optimism and that reporting pessimism. The range is -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism. NR = (I – D), where, I is the percentage response of ‘Increase/optimism’, and D is the percentage response of ‘Decrease/pessimism’ and E is the percentage response as ‘no change/Equal’; I+D+E=100. For example, increase in production is optimism whereas decrease in cost of raw material is optimism.