RBI Releases the Results of its Industrial Outlook Survey

Magazine

By: Industry Outlook Team | Thursday, 06 August 2020

The results of the 90th round of Industrial Outlook Survey (IOS) conducted by Reserve Bank of India in April-June, 2020 have been released by the central bank. The survey aimed at assessing in a qualitative manner the business climate from the perspective of Indian manufacturers. The results have come out painting a picture of the manufacturer’s assessment for Quarter 1:2020-21. The survey has also tried to measure the manufacturer’s expectations for Quarter 2:2020-21.

As per the report released by RBI, the total number of companies that participated in the survey was 802. Considering the turbulence being felt across industries in current times, an additional section was added in the survey to garner foresights pertaining to the next two quarters and also of one year into the future.

The following are the highlights of the assessment for Q1: 2020-21:

1) Manufacturing companies assessed faltering of major demand indicators like production, order books and employment conditions in Q1:2020-21; the perception of external demand conditions was also pessimistic.
2) Sentiment for overall financial situation was negative, largely driven by downfall in internal accruals.
3) Cost pressures stemming from interest payments on borrowings and purchase of inputs were assessed to soften; salary expenses also eased.
4) Respondents polled reduction in selling prices and plunge in profit margins.
5) The Business Assessment Index (BAI) fell sharply to all-time low at 55.3 in Q1:2020-21 from 102.2 in the previous quarter.

The expectations of manufacturers for Q2: 2020-21 are:

1) Manufacturers expected improvements in production and order books in Q2:2020-21; the sentiments on job landscape and external demand, however, remained weak.
2) Outlook on overall financial situation portrayed some optimism.
3) Respondents tempered their expectations on selling prices on the back of lower cost burdens from inputs and salary outgo.
4) Sentiments on profit margins remain highly negative during Q2:2020-21 also.
5) The business expectations index (BEI) dipped into contraction zone and stood at 99.5 for Q2:2020-21.

With a futuristic vision, the expectations for Q3:2020-21 and Q1:2021-22 have also been included in the survey.

1) Manufacturers polled distinct betterment in key demand indicators in Q3:2020-21 sustaining through Q1:2021-22.
2) Overall business situation is expected to gradually improve by Q1:2021-22.