Business Assessment Index recovers from lows: RBI Data

Reserve Bank of India (RBI) released the survey results of the 91st round of the Industrial Outlook Survey (IOS), which was conducted during the quarter ended September 30, 2020.

The survey was aimed at a qualitative assessment of the business climate in the Indian manufacturing companies for the quarter and their expectations for the next quarter.

The survey emphasised on the commentary from industrialists regarding the state of the economic revival. The manufacturing companies recorded an upturn in production, capacity utilisation, and order bookings during the quarter from the unprecedented contraction in the previous quarter. As per the aggregate data, the capacity utilisation fell from 69.9 per cent in Q4FY20 to 47.3 per cent in Q1FY21, as a result of the nationwide lockdown.

Further, the data revealed that the negative sentiments on selling prices and profit margins continued during the quarter with reduced pessimism over the given period.

Overall, business sentiment in the manufacturing sector, which is reflected by the business assessment index (BAI), surged from a record low at 55.3 in Q1 to 96.2 in Q2, (but still remains in the contraction zone).

Though with continuous reopening and demand revival, the companies are expecting further improvements in the production, capacity utilisation, and order book yet profit margins outlook remains negative for the next quarter.