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Industrial Outlook Survey of the Manufacturing Sector for Q1:2024-25

Today, the Reserve Bank released the results of 106th round of its quarterly industrial outlook survey (IOS). The survey1 encapsulates qualitative assessment of the business climate by Indian manufacturing companies for Q1:2024-25 and their expectations for Q2:2024-25 as well as outlook on select parameters for the subsequent two quarters. In all, 1,351 companies responded in this round of the survey, which was conducted during April-June 2024.

Highlights:

A. Assessment for Q1:2024-25

  • Manufacturers’ assessment of growth in demand conditions moderated from the previous quarter as reflected in their gauge of production, order books, capacity utilisation, employment and overall business situation, but remained positive (Table A).

  • Respondents reported some easing in pressures from cost of finance, while pressures on account of input costs and salary outgo were assessed to have gone up during Q1:2024-25.

  • Manufacturers assessment of growth in selling prices remained around that assessed in the previous survey; profit margins were reported to deteriorate.

  • Overall, business sentiment in the Indian manufacturing sector moderated, as reflected in the business assessment index (BAI)2 moving to 110.8 in Q1:2024-25 from 114.2 in the previous quarter (Chart 1).

B. Expectations for Q2:2024-25

  • Manufacturers’ optimism on demand conditions moderated further in Q2:2024-25.

  • Input cost pressures are expected to persist, however, pressures from finance cost and wage bill are anticipated to soften.

  • Respondents expected moderation in selling prices growth and subdued profit margin vis-à-vis previous quarter.

  • The business expectations index (BEI) moderated for the third consecutive quarter to 119.1 from its level of 127.2 in the previous quarter (Chart 1).

Chart_1

C. Expectations for Q3 and Q4:2024-25

  • Demand conditions are expected to improve during the second half of the current financial year (Table B).

  • Manufacturers expect input cost pressures to persist and anticipate better pricing power in terms of higher growth in selling prices on the back of improved demand conditions in H2:2024-25.

Table A: Summary of Net responses3 on Survey Parameters
(per cent)
Parameters Assessment period Expectation period
Q4:2023-24 Q1:2024:25 Q1:2024:25 Q2:2024:25
Production 34.4 27.9 54.0 36.3
Order Books 31.8 25.6 51.1 35.2
Pending Orders 6.2 5.9 1.8 1.8
Capacity Utilisation 24.9 18.7 43.6 29.2
Inventory of Raw Materials -7.3 -5.9 -16.3 -8.3
Inventory of Finished Goods -6.4 -5.5 -16.2 -7.7
Exports 15.7 10.9 36.1 24.8
Imports 13.8 13.9 31.1 22.8
Employment 16.8 11.2 29.1 15.6
Financial Situation (Overall) 34.8 28.5 54.0 42.2
Availability of Finance (from internal accruals) 29.9 23.0 44.8 31.8
Availability of Finance (from banks & other sources) 26.1 20.0 40.5 27.2
Availability of Finance (from overseas, if applicable) 15.9 9.8 33.2 16.9
Cost of Raw Material -43.8 -49.3 -52.8 -51.0
Cost of Finance -24.8 -16.6 -36.3 -19.2
Salary/ Other Remuneration -24.3 -41.7 -51.9 -26.1
Selling Price 8.1 8.0 24.7 17.2
Profit Margin -3.4 -12.3 20.0 9.9
Overall Business Situation 35.9 29.6 56.5 45.0
 
Table B: Business Expectations on Select Parameters for extended period – Net response
(per cent)
Parameters Round 105 Round 106
Q1:2024:25 Q2:2024:25 Q3:2024:25 Q4:2024:25
Overall Business Situation 56.5 45.0 52.5 52.3
Production 54.0 36.3 50.3 50.5
Order Books 51.1 35.2 49.1 48.3
Capacity Utilisation 43.6 29.2 48.2 46.7
Employment 29.1 15.6 29.6 29.2
Cost of Raw Materials -52.8 -51.0 -48.2 -47.5
Selling Prices 24.7 17.2 28.8 29.3

Note: Please see the excel file for time series data.

Table 1: Assessment and Expectations for Production
(Percentage responses)@
Quarter Total response Assessment Expectations
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 39.6 14.3 46.0 25.3 60.6 5.8 33.6 54.8
Q2:2023-24 1,223 45.2 11.2 43.6 34.0 63.0 5.0 31.9 58.0
Q3:2023-24 1,040 41.2 12.2 46.7 29.0 70.9 5.7 23.4 65.1
Q4:2023-24 1,354 46.6 12.3 41.1 34.4 62.3 4.2 33.6 58.1
Q1:2024-25 1,351 41.4 13.6 45.0 27.9 60.0 6.0 34.0 54.0
Q2:2024-25           40.7 4.3 55.0 36.3
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 33.0 11.1 55.9 21.9 54.6 6.8 38.6 47.8
Q2:2023-24 1,223 41.1 10.4 48.5 30.7 63.0 4.8 32.2 58.1
Q3:2023-24 1,040 38.3 12.0 49.7 26.3 68.5 6.1 25.4 62.3
Q4:2023-24 1,354 43.4 11.6 44.9 31.8 61.8 6.0 32.1 55.8
Q1:2024-25 1,351 39.9 14.3 45.9 25.6 57.1 6.0 36.9 51.1
Q2:2024-25           39.4 4.2 56.3 35.2
‘Increase’ in order books is optimistic.
@: Due to rounding off percentage may not add up to 100.
 
Table 3: Assessment and Expectations for Pending Orders
(Percentage responses)
Quarter Total response Assessment Expectations
Above Normal Below Normal Normal Net response Above Normal Below Normal Normal Net response
Q1:2023-24 1,247 9.2 14.1 76.6 4.9 4.5 8.0 87.5 3.4
Q2:2023-24 1,223 8.6 11.6 79.8 3.1 10.9 9.2 79.9 -1.7
Q3:2023-24 1,040 8.6 11.9 79.4 3.3 9.7 8.5 81.8 -1.1
Q4:2023-24 1,354 5.5 11.7 82.8 6.2 8.2 9.3 82.5 1.1
Q1:2024-25 1,351 5.7 11.6 82.7 5.9 6.4 8.1 85.5 1.8
Q2:2024-25           4.2 6.0 89.8 1.8
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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 28.5 13.0 58.5 15.5 46.7 5.5 47.8 41.2
Q2:2023-24 1,223 38.2 8.7 53.0 29.5 51.8 5.2 42.9 46.6
Q3:2023-24 1,040 30.1 10.6 59.3 19.6 62.1 4.6 33.3 57.5
Q4:2023-24 1,354 34.9 9.9 55.2 24.9 51.2 4.6 44.2 46.7
Q1:2024-25 1,351 30.1 11.4 58.6 18.7 48.4 4.8 46.8 43.6
Q2:2024-25           33.2 4.0 62.9 29.2
‘Increase’ in capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.
 
Table 5: Level of capacity utilisation (compared to the average in preceding 4 quarters)
(Percentage responses)
Quarter Total response Assessment Expectations
Above Normal Below Normal Normal Net response Above Normal Below Normal Normal Net response
Q1:2023-24 1,247 31.4 10.4 58.2 21.0 23.7 6.2 70.2 17.5
Q2:2023-24 1,223 30.5 9.0 60.6 21.5 39.0 6.0 55.1 33.0
Q3:2023-24 1,040 26.2 9.4 64.4 16.7 36.1 6.1 57.8 30.1
Q4:2023-24 1,354 20.0 10.4 69.6 9.6 33.3 5.7 61.1 27.6
Q1:2024-25 1,351 16.2 11.7 72.1 4.6 22.5 7.1 70.4 15.4
Q2:2024-25           13.1 4.7 82.2 8.4
‘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
More than adequate Less than adequate Adequate Net response More than adequate Less than adequate Adequate Net response
Q1:2023-24 1,247 25.8 5.7 68.4 20.1 25.3 3.8 70.9 21.5
Q2:2023-24 1,223 23.3 4.0 72.7 19.3 43.4 3.9 52.7 39.5
Q3:2023-24 1,040 25.1 4.7 70.2 20.4 42.7 3.2 54.1 39.5
Q4:2023-24 1,354 17.7 5.6 76.7 12.1 38.5 3.6 57.9 34.9
Q1:2024-25 1,351 9.8 3.2 87.0 6.6 27.2 4.7 68.1 22.5
Q2:2024-25           14.7 2.5 82.8 12.3
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 30.1 12.5 57.4 17.6 43.0 6.8 50.2 36.2
Q2:2023-24 1,223 27.7 10.0 62.3 17.7 57.9 4.4 37.7 53.5
Q3:2023-24 1,040 25.1 13.5 61.3 11.6 58.1 5.0 36.9 53.1
Q4:2023-24 1,354 26.4 10.7 62.9 15.7 50.3 6.7 43.0 43.6
Q1:2024-25 1,351 23.7 12.8 63.4 10.9 41.6 5.5 52.9 36.1
Q2:2024-25           29.2 4.4 66.4 24.8
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 28.9 8.6 62.5 20.4 37.4 4.2 58.4 33.2
Q2:2023-24 1,223 25.5 8.2 66.3 17.2 55.8 3.2 41.0 52.6
Q3:2023-24 1,040 23.2 8.7 68.0 14.5 54.8 3.9 41.3 51.0
Q4:2023-24 1,354 21.6 7.8 70.6 13.8 45.2 4.2 50.6 41.0
Q1:2024-25 1,351 21.6 7.7 70.7 13.9 35.2 4.1 60.7 31.1
Q2:2024-25           25.7 3.0 71.3 22.8
‘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
Above average Below average Average Net response Above average Below average Average Net response
Q1:2023-24 1,247 13.4 7.1 79.5 -6.3 20.5 2.5 76.9 -18.0
Q2:2023-24 1,223 11.5 5.3 83.2 -6.1 33.0 4.0 63.1 -29.0
Q3:2023-24 1,040 12.9 4.1 83.0 -8.9 30.9 3.6 65.6 -27.3
Q4:2023-24 1,354 13.3 6.0 80.7 -7.3 27.4 1.7 70.9 -25.7
Q1:2024-25 1,351 11.9 6.0 82.1 -5.9 20.2 3.9 75.9 -16.3
Q2:2024-25           10.7 2.3 87.0 -8.3
‘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
Above average Below average Average Net response Above average Below average Average Net response
Q1:2023-24 1,247 14.0 6.8 79.2 -7.2 19.9 2.8 77.3 -17.2
Q2:2023-24 1,223 11.7 4.5 83.7 -7.2 33.2 4.4 62.4 -28.8
Q3:2023-24 1,040 14.0 4.5 81.5 -9.5 31.4 3.3 65.3 -28.2
Q4:2023-24 1,354 12.4 6.0 81.7 -6.4 27.3 2.0 70.7 -25.3
Q1:2024-25 1,351 11.9 6.4 81.7 -5.5 20.1 3.9 75.9 -16.2
Q2:2024-25           10.3 2.6 87.1 -7.7
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 25.9 9.9 64.2 16.1 29.8 3.1 67.1 26.7
Q2:2023-24 1,223 25.1 7.1 67.7 18.0 43.5 3.0 53.5 40.5
Q3:2023-24 1,040 25.1 6.9 67.9 18.2 42.5 3.7 53.8 38.8
Q4:2023-24 1,354 21.7 4.9 73.4 16.8 41.7 2.2 56.1 39.5
Q1:2024-25 1,351 18.5 7.3 74.1 11.2 31.3 2.2 66.5 29.1
Q2:2024-25           17.7 2.1 80.2 15.6
‘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
Better Worsen No change Net response Better Worsen No change Net response
Q1:2023-24 1,247 36.6 12.6 50.7 24.0 56.3 3.4 40.3 52.9
Q2:2023-24 1,223 41.6 10.7 47.7 30.9 60.2 3.9 35.9 56.3
Q3:2023-24 1,040 36.8 11.2 52.0 25.6 68.7 5.1 26.2 63.5
Q4:2023-24 1,354 45.0 10.1 44.9 34.8 58.2 4.0 37.8 54.2
Q1:2024-25 1,351 40.9 12.4 46.7 28.5 59.2 5.2 35.6 54.0
Q2:2024-25           44.7 2.5 52.8 42.2
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 34.8 5.8 59.4 29.1 48.0 1.9 50.0 46.1
Q2:2023-24 1,223 38.4 5.1 56.6 33.3 53.3 2.2 44.4 51.1
Q3:2023-24 1,040 32.8 6.9 60.3 26.0 60.2 2.6 37.3 57.6
Q4:2023-24 1,354 37.5 4.7 57.8 32.8 49.6 2.9 47.6 46.7
Q1:2024-25 1,351 31.6 6.5 61.9 25.1 46.6 3.0 50.4 43.6
Q2:2024-25           32.0 2.1 66.0 29.9
‘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
Improve Worsen No change Net response Improve Worsen No change Net response
Q1:2023-24 1,247 33.2 7.4 59.4 25.8 48.7 2.0 49.3 46.6
Q2:2023-24 1,223 37.1 6.3 56.6 30.8 54.4 2.1 43.5 52.3
Q3:2023-24 1,040 30.6 6.9 62.5 23.7 61.6 2.5 35.9 59.1
Q4:2023-24 1,354 35.9 6.0 58.0 29.9 49.3 2.0 48.7 47.4
Q1:2024-25 1,351 29.5 6.5 64.0 23.0 47.7 2.9 49.4 44.8
Q2:2024-25           33.0 1.2 65.9 31.8
‘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
Improve Worsen No change Net response Improve Worsen No change Net response
Q1:2023-24 1,247 26.5 6.1 67.4 20.4 42.2 2.1 55.7 40.1
Q2:2023-24 1,223 34.9 5.7 59.4 29.1 50.5 1.5 47.9 49.0
Q3:2023-24 1,040 28.8 5.6 65.5 23.2 58.2 2.5 39.3 55.8
Q4:2023-24 1,354 31.2 5.1 63.6 26.1 46.5 2.1 51.4 44.5
Q1:2024-25 1,351 25.9 5.9 68.3 20.0 43.2 2.8 54.0 40.5
Q2:2024-25           28.7 1.4 69.9 27.2
‘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
Improve Worsen No change Net response Improve Worsen No change Net response
Q1:2023-24 1,247 23.8 5.8 70.4 18.0 34.3 1.8 64.0 32.5
Q2:2023-24 1,223 24.3 5.7 69.9 18.6 52.4 2.0 45.7 50.4
Q3:2023-24 1,040 20.2 6.0 73.9 14.2 56.4 2.9 40.7 53.5
Q4:2023-24 1,354 21.2 5.2 73.6 15.9 45.3 1.4 53.4 43.9
Q1:2024-25 1,351 16.2 6.5 77.3 9.8 35.9 2.7 61.5 33.2
Q2:2024-25           18.1 1.2 80.7 16.9
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 36.9 4.5 58.6 -32.4 47.5 1.7 50.8 -45.8
Q2:2023-24 1,223 33.0 6.6 60.4 -26.4 56.4 2.2 41.5 -54.2
Q3:2023-24 1,040 29.2 6.8 64.0 -22.5 58.5 3.6 37.9 -54.9
Q4:2023-24 1,354 31.3 6.5 62.3 -24.8 48.8 2.9 48.3 -45.9
Q1:2024-25 1,351 23.3 6.7 70.0 -16.6 40.3 4.1 55.6 -36.3
Q2:2024-25           22.1 2.9 75.0 -19.2
‘Decrease’ in cost of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here. The column heads, namely ‘Increase’ and ‘Decrease’ in data releases for rounds 82-87 were interchanged and should be read as above.
 
Table 18: Assessment and Expectations for Cost of Raw Materials
(Percentage responses)
Quarter Total response Assessment Expectations
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 49.1 8.0 42.8 -41.1 62.6 1.7 35.8 -60.9
Q2:2023-24 1,223 49.3 5.5 45.3 -43.8 60.6 2.4 37.0 -58.3
Q3:2023-24 1,040 41.8 8.4 49.7 -33.4 67.8 2.8 29.3 -65.0
Q4:2023-24 1,354 50.2 6.3 43.5 -43.8 57.0 2.9 40.1 -54.2
Q1:2024-25 1,351 53.9 4.6 41.5 -49.3 55.9 3.1 40.9 -52.8
Q2:2024-25           52.1 1.1 46.9 -51.0
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 41.1 3.0 56.0 -38.1 45.2 0.9 53.9 -44.3
Q2:2023-24 1,223 32.3 3.5 64.2 -28.8 49.8 0.5 49.7 -49.3
Q3:2023-24 1,040 30.3 4.1 65.7 -26.2 47.3 1.7 51.0 -45.6
Q4:2023-24 1,354 26.1 1.8 72.1 -24.3 42.9 0.9 56.2 -42.0
Q1:2024-25 1,351 42.9 1.2 55.9 -41.7 52.9 0.9 46.2 -51.9
Q2:2024-25           26.7 0.6 72.7 -26.1
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 26.1 13.3 60.6 12.8 34.0 5.6 60.4 28.4
Q2:2023-24 1,223 22.3 10.6 67.1 11.7 46.9 5.4 47.7 41.4
Q3:2023-24 1,040 22.0 11.9 66.1 10.2 45.2 5.2 49.6 40.1
Q4:2023-24 1,354 18.9 10.8 70.3 8.1 40.4 5.6 54.0 34.8
Q1:2024-25 1,351 18.5 10.5 71.0 8.0 30.5 5.7 63.8 24.7
Q2:2024-25           20.3 3.1 76.5 17.2
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
Q1:2023-24 1,247 20.6 21.8 57.5 -1.2 30.5 11.4 58.1 19.1
Q2:2023-24 1,223 21.9 17.4 60.7 4.5 43.8 8.1 48.1 35.7
Q3:2023-24 1,040 20.5 19.1 60.4 1.4 45.5 9.7 44.8 35.8
Q4:2023-24 1,354 17.2 20.6 62.1 -3.4 40.3 9.5 50.2 30.8
Q1:2024-25 1,351 13.0 25.3 61.7 -12.3 30.4 10.4 59.2 20.0
Q2:2024-25           16.7 6.8 76.4 9.9
‘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
Better Worsen No change Net response Better Worsen No change Net response
Q1:2023-24 1,247 39.9 15.0 45.1 24.9 62.4 4.0 33.6 58.3
Q2:2023-24 1,223 46.0 11.8 42.2 34.3 65.0 4.3 30.7 60.7
Q3:2023-24 1,040 40.6 12.0 47.4 28.6 73.1 5.2 21.7 67.9
Q4:2023-24 1,354 47.2 11.3 41.4 35.9 62.5 4.2 33.3 58.3
Q1:2024-25 1,351 42.7 13.1 44.2 29.6 62.0 5.5 32.5 56.5
Q2:2024-25           47.4 2.5 50.1 45.0
‘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)
Q1:2023-24 112.2 126.4
Q2:2023-24 115.0 132.5
Q3:2023-24 113.9 135.4
Q4:2023-24 114.2 130.3
Q1:2024-25 110.8 127.2
Q2:2024-25   119.1

1 The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank. Results of the previous survey round were released on the Bank’s website on April 05, 2024.

2 For each survey round, two summary indices are computed – one based on assessment [viz., Business Assessment Index (BAI)] and another based on expectations [viz., Business Expectations Index (BEI)]. Each index is a composite indicator calculated as a simple average of nine business parameters, where each parameter is derived as a weighted net response, weights being the share of industry groups in gross value added (GVA). The nine parameters 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 between the percentage of respondents reporting optimism and those reporting pessimism. It ranges between -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism. In other words, 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.e., I+D+E=100).  For example, increase in production is optimism whereas decrease in cost of raw material is optimism.

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