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Industrial Outlook Survey of the Manufacturing Sector for Q4:2019-20

Today, the Reserve Bank released the results of the 89th round of the Industrial Outlook Survey (IOS) conducted during January-March, 2020. The survey encapsulates qualitative assessments of the business climate by Indian manufacturing companies for Q4:2019-20 and their expectations for Q1:2020-211. In all, 860 companies responded in this round of the survey.

In the wake of the sudden adverse impact of the coronavirus outbreak on industrial activities, a quick survey on a few critical IOS parameters was conducted during March 18-20, 2020 among these 860 respondents, of which, 48 companies responded to the repeat survey. The feedback from these 48 companies is summarised in Special Tables 24 and 25.

Highlights:

A. Assessment for Q4: 2019-20

  • Manufacturing companies assessed some improvement in production and order books in Q4:2019-20 from the weak sentiments exhibited in the previous quarter; the sentiments on employment conditions became mildly optimistic.

  • Respondents polled positive sentiments on external demand and their assessment of the overall financial situation improved.

  • Prices of raw materials as well as selling prices were assessed to increase, but assessment of profit margins continued to be subdued, albeit there was some abatement in the downbeat sentiments.

  • Pressures stemming from interest payments on borrowings and salary expenses were assessed to soften.

  • The Business Assessment Index (BAI)2 attained a level of 102.2 and moved into the zone of optimism after two successive quarters of prevailing pessimism.

B. Expectations for Q1: 2020-21

  • Respondents expected improvements in demand conditions in Q1: 2020-21.

  • Manufacturers remained optimistic on the overall financial situation.

  • Manufacturers expected higher selling prices on the back of increased cost pressures from inputs and higher salary outgo; profit margins projections for Q1:2020-21, however, continued to be pessimistic though there was some moderation in pessimism.

  • Due to anticipated improvement in the demand parameters, the business expectations index (BEI) increased from 105.0 in Q4:2019-20 to 108.8 in Q1:2020-21.

C. Quick survey results (48 companies)

  • Respondents of the repeat survey conducted during March 18-20, 2020 covered 48 companies, who assessed demand conditions to deteriorate for the manufacturing sector, which also translated into pessimism on the overall business situation for Q4:2019-20. The outlook for Q1:2020-21 also indicated negative sentiment.

  • A comparison of results for the common respondents both for round 89 of IOS as well as the quick survey reflected (a) very sharp deterioration in sentiments across all sectors for Q4:2019-20; and (b) stark pessimism for Q1:2020-21, when compared to their assessment given in the regular round of the survey.

Summary Table
Net responses
3
(per cent)
Parameters Assessment period Expectations period
Q3:2019-20 Q4:2019-20 Q4:2019-20 Q1:2020-21
Production 0.4 13.8 17.2 23.7
Order Books 0.3 10.0 16.6 18.4
Pending Orders 22.1 14.4 15.9 11.6
Capacity Utilisation -8.3 2.0 7.9 11.3
Inventory of Raw Materials -6.2 -5.1 -3.6 -2.9
Inventory of Finished Goods -11.0 -6.5 -6.7 -4.3
Exports -0.9 5.8 8.6 11.0
Imports 0.9 4.7 5.4 6.6
Employment -1.6 2.0 1.8 5.2
Financial Situation (Overall) 5.3 12.8 19.5 24.3
Availability of Finance (from internal accruals) 6.6 13.7 13.4 17.0
Availability of Finance (from banks & other sources) 7.2 10.8 11.7 11.7
Availability of Finance (from overseas, if applicable) 2.5 2.8 3.0 4.0
Cost of Finance -8.7 -6.6 -7.9 -6.1
Cost of Raw Material -26.1 -34.1 -30.0 -33.6
Salary/ Other Remuneration -27.0 -24.8 -22.1 -33.1
Selling Price -9.6 2.5 2.2 8.3
Profit Margin -22.1 -11.6 -10.2 -2.9
Overall Business Situation 3.5 15.7 22.6 28.2
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
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
Q3:2019-20 775 28.7 28.3 43.1 0.4 34.8 21.0 44.2 13.9
Q4:2019-20 860 33.6 19.8 46.6 13.8 35.4 18.2 46.4 17.2
Q1:2020-21           37.8 14.1 48.1 23.7
‘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
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
Q3:2019-20 775 26.9 26.6 46.5 0.3 34.3 20.4 45.3 13.9
Q4:2019-20 860 30.1 20.1 49.9 10.0 33.6 17.0 49.3 16.6
Q1:2020-21           33.5 15.1 51.4 18.4
‘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
Above Normal Below Normal Normal Net response Above Normal Below Normal Normal Net response
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
Q3:2019-20 775 3.4 25.5 71.1 22.1 3.9 18.3 77.8 14.4
Q4:2019-20 860 4.1 18.5 77.4 14.4 3.7 19.5 76.8 15.9
Q1:2020-21           4.6 16.2 79.1 11.6
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
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
Q3:2019-20 775 17.5 25.8 56.7 -8.3 24.4 20.0 55.6 4.4
Q4:2019-20 860 21.0 19.0 60.0 2.0 23.1 15.2 61.6 7.9
Q1:2020-21           25.5 14.2 60.3 11.3
‘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
Above Normal Below Normal Normal Net response Above Normal Below Normal Normal Net response
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
Q3:2019-20 775 6.6 26.9 66.5 -20.3 9.3 21.7 69.0 -12.4
Q4:2019-20 860 7.6 21.6 70.7 -14.0 7.9 18.5 73.6 -10.6
Q1:2020-21           9.1 16.4 74.5 -7.3
‘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
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
Q3:2019-20 775 15.8 11.7 72.5 4.2 15.3 12.4 72.2 2.9
Q4:2019-20 860 14.3 9.5 76.2 4.8 14.6 11.4 74.0 3.2
Q1:2020-21           13.7 8.8 77.5 4.9
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
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
Q3:2019-20 775 18.3 19.2 62.5 -0.9 24.3 17.0 58.7 7.3
Q4:2019-20 860 20.1 14.3 65.5 5.8 22.4 13.8 63.9 8.6
Q1:2020-21           22.5 11.5 66.0 11.0
‘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
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
Q3:2019-20 775 13.2 12.3 74.5 0.9 18.1 11.7 70.2 6.4
Q4:2019-20 860 16.0 11.3 72.7 4.7 15.7 10.2 74.1 5.4
Q1:2020-21           16.9 10.3 72.8 6.6
‘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
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
Q3:2019-20 775 13.9 7.7 78.4 -6.2 13.2 6.6 80.3 -6.6
Q4:2019-20 860 12.9 7.8 79.3 -5.1 10.6 7.0 82.4 -3.6
Q1:2020-21           9.8 6.9 83.3 -2.9
‘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
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
Q3:2019-20 775 18.3 7.3 74.4 -11.0 15.7 5.0 79.3 -10.7
Q4:2019-20 860 13.3 6.7 80.0 -6.5 12.9 6.2 80.9 -6.7
Q1:2020-21           10.4 6.2 83.4 -4.3
‘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
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
Q3:2019-20 775 12.2 13.8 74.0 -1.6 12.1 11.4 76.5 0.7
Q4:2019-20 860 13.4 11.3 75.3 2.0 12.5 10.7 76.8 1.8
Q1:2020-21           14.3 9.0 76.7 5.2
‘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
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
Q3:2019-20 775 24.6 19.3 56.1 5.3 30.6 14.8 54.7 15.8
Q4:2019-20 860 26.5 13.6 59.9 12.8 31.2 11.7 57.1 19.5
Q1:2020-21           33.1 8.8 58.0 24.3
‘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
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
Q3:2019-20 775 27.4 8.7 63.9 18.7 29.3 5.5 65.3 23.8
Q4:2019-20 860 28.3 6.4 65.4 21.9 27.3 5.7 66.9 21.6
Q1:2020-21           28.8 5.7 65.5 23.1
‘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
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
Q3:2019-20 775 19.0 12.4 68.6 6.6 21.4 8.1 70.5 13.2
Q4:2019-20 860 23.1 9.5 67.4 13.7 22.1 8.8 69.1 13.4
Q1:2020-21           23.1 6.0 70.9 17.0
‘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
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
Q3:2019-20 775 14.6 7.4 78.1 7.2 18.7 6.0 75.3 12.7
Q4:2019-20 860 16.9 6.1 76.9 10.8 17.7 5.9 76.4 11.7
Q1:2020-21           18.1 6.4 75.4 11.7
‘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
Improve Worsen No change Net response Improve Worsen No change Net response
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
Q3:2019-20 775 7.5 5.0 87.6 2.5 9.2 4.1 86.7 5.1
Q4:2019-20 860 7.2 4.4 88.4 2.8 7.3 4.3 88.4 3.0
Q1:2020-21           7.9 4.0 88.1 4.0
‘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
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
Q3:2019-20 775 16.9 8.2 74.9 -8.7 18.5 8.4 73.1 -10.0
Q4:2019-20 860 15.0 8.4 76.6 -6.6 15.0 7.1 77.9 -7.9
Q1:2020-21           12.7 6.6 80.6 -6.1
‘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
Increase Decrease No change Net response Increase Decrease No change Net response
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
Q3:2019-20 775 37.2 11.1 51.7 -26.1 37.0 6.2 56.8 -30.8
Q4:2019-20 860 41.1 7.1 51.8 -34.1 35.6 5.6 58.8 -30.0
Q1:2020-21           38.9 5.3 55.7 -33.6
‘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
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
Q3:2019-20 775 30.6 3.6 65.8 -27.0 25.0 1.8 73.2 -23.2
Q4:2019-20 860 27.1 2.3 70.6 -24.8 25.1 3.0 71.9 -22.1
Q1:2020-21           35.8 2.7 61.5 -33.1
‘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
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
Q3:2019-20 775 12.0 21.6 66.4 -9.6 18.6 14.0 67.3 4.6
Q4:2019-20 860 16.4 13.9 69.7 2.5 15.2 13.0 71.9 2.2
Q1:2020-21           18.0 9.7 72.3 8.3
‘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
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
Q3:2019-20 775 12.3 34.4 53.3 -22.1 17.6 26.1 56.3 -8.5
Q4:2019-20 860 15.8 27.4 56.8 -11.6 16.3 26.4 57.3 -10.2
Q1:2020-21           17.5 20.4 62.1 -2.9
‘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
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
Q3:2019-20 775 26.4 22.9 50.8 3.5 37.3 15.6 47.1 21.7
Q4:2019-20 860 31.6 15.8 52.6 15.7 35.8 13.2 50.9 22.6
Q1:2020-21           38.6 10.4 50.9 28.2
‘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)
Q4:2018-19 107.2 116.2
Q1:2019-20 108.4 113.5
Q2:2019-20 92.5 112.8
Q3:2019-20 93.0 102.2
Q4:2019-20 102.2 105.0
Q1:2020-21   108.8

Special Tables:

Summary Results of Quick Survey (48 respondents) during March 18-20, 2020:
Assessment for Q4:2019-20 and Expectations for Q1:2020-21

Table 24: Comparison of net responses based on quick survey with full survey results of previous round
Parameters Assessment period Expectations period
Q3:2019-20 Q4:2019-20 Q4:2019-20 Q1:2020-21
Production 0.4 -45.8 17.2 -37.5
Order Books 0.3 -46.5 16.6 -41.9
Employment -1.6 -10.4 1.8 -14.6
Capacity utilisation -8.3 -34.0 7.9 -40.4
Overall Business Situation 3.5 -31.3 22.6 -35.4

Table 25: Comparison of net responses based on quick survey with responses from same cohort of respondents for round 89
Parameters Assessment period Expectations period
Q4:2019-20
(based on responses to the regular IOS round 89)
Q4:2019-20
(based on responses to quick repeat survey)
Q1:2020-21
(based on responses to the regular IOS round 89)
Q1:2020-21
(based on responses to quick repeat survey)
Production 2.2 -45.8 13.0 -37.5
Order Books 9.5 -46.5 16.3 -41.9
Employment 0.0 -10.4 4.3 -14.6
Capacity utilisation 2.2 -34.0 22.2 -40.4
Overall Business Situation 0.0 -31.3 26.1 -35.4

1 The survey results reflect the views of the respondents, which are not necessarily shared by the Reserve Bank of India. This round of the survey was launched on January 30, 2020 and results were compiled with data received till March 18, 2020. The results of the 88th round of the survey (Q3:2019-20) were released on February 6, 2020 on the RBI’s website.

2 For each of the survey round, two indices are computed - one based on assessment [viz., Business Assessment Index (BAI)] and another based on expectations [viz., Business Expectations Index (BEI)]. Each indicator for is calculated as a weighted net response of nine business indicators, weights being the share of industry groups in GVA. 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.

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