Reserve Bank of India’s Industrial Outlook Survey (IOS) indicated a decline in business sentiments. The survey provides qualitative assessment of business situation of companies in the Indian manufacturing sector for Q3:2016-17 and their expectations for the ensuing quarter Q4:2016-17.
Assessment for Q3:2016-17
The survey indicated slight moderation in the sentiments in demand condition for the second successive quarter. In respect of several parameters like order books, capacity utilisation and imports, the level of optimism was lower in this quarter than Q2:2016-17.
However, the respondents were somewhat more optimistic about the export performance than Q2:2016-17 while the optimism on production remained unchanged.
Expectation for Q4: 2016-17
The outlook on business sentiments in Q4: 2016-17 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.