As per the 76th round of the Reserve Bank of India's (RBI) Industrial Outlook Survey (IOS), the business sentiment outlook for the January-March quarter of the fiscal has shown deterioration in respect of demand conditions.
The survey indicates a decline in the business sentiments, with an elicited response from 1221 manufacturing companies.
It provides qualitative assessment of business situation of companies in the Indian manufacturing sector for Q3 in 2016-17 and their expectations for the ensuing quarter Q4:2016-17
Further indicating slight moderation in the sentiments, the survey indicates the demand condition for the second successive quarter.
In respect of several parameters like order books, capacity utilization and imports, the level of optimism was lower in this quarter than Q2:2016-17.
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However, the respondents were somewhat more optimistic about the export performance than Q2:2016-17 while the optimism on production remained unchanged.
Availability of finance from banks and other sources were perceived to have worsened. However, due to reduced pessimism about the cost of finance and the cost of raw material, the sentiment on profit margin remained largely unchanged.
Overall, the business sentiments of the Indian manufacturing sector, as inferred from the Business Expectation Index (BEI), deteriorated for the second successive quarter.
The outlook on business sentiments in Q4: 2016-17 largely followed similar pattern. However, in respect of demand condition (Order Books, Production), the outlook deteriorated. Pressure from rise in cost of raw material was expected to bring down profit margin. Improved sentiments were expressed in pending orders, exports, and cost of finance.
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