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Date : Oct 09, 2024
Industrial Outlook Survey of the Manufacturing Sector for Q2:2024-25

Today, the Reserve Bank released the results of 107th round of its quarterly industrial outlook survey (IOS). The survey1 encapsulates qualitative assessment of the business climate by Indian manufacturing companies for Q2:2024-25 and their expectations for Q3:2024-25 as well as outlook on select parameters for the subsequent two quarters. In all, 1,300 companies responded in this round of the survey2, which was conducted during July-September 2024.

Highlights:

A. Assessment for Q2:2024-25

  • Manufacturing companies reported some moderation in demand expansion during Q2:2024-25 as reflected in their assessment on production, order books, capacity utilisation, employment and overall business situation (Table A).

  • Pressures from cost of raw material, financing cost and salary outgo were assessed to have tempered and, in accordance, sentiments on growth in selling prices and profit margins also moderated.

  • The business assessment index (BAI) remained in expansion zone but moderated to 108.3 in Q2:2024-25 from 110.8 in the previous quarter (Chart 1).

B. Expectations for Q3:2024-25

  • Manufacturers maintained their optimism on demand conditions during Q3:2024-25.

  • Cost of financing and salary outgo are likely to rise. Pressures from raw material cost are expected to ease, and selling price growth momentum may continue.

  • The business expectations index (BEI) improved to 120.3 in Q3:2024-25 from 119.1 in the previous quarter (Chart 1).

Chart 1

C. Expectations for Q4:2024-25 and Q1:2025-26

  • Manufacturers polled for better expectations on production, order books, employment, capacity utilisation and overall business situation during Q4:2024-25 and Q1:2025-26 (Table B).

  • Input cost pressures are likely to continue for manufacturers, who expect to retain pricing power and increase in selling prices on the back of robust demand conditions.

Table A: Summary of Net responses3 on Survey Parameters
(per cent)
Parameters Assessment period Expectation period
Q1:2024-25 Q2:2024-25 Q2:2024-25 Q3:2024-25
Production 27.9 22.9 36.3 36.3
Order Books 25.6 19.5 35.2 33.3
Pending Orders 5.9 8.0 1.8 1.8
Capacity Utilisation 18.7 15.1 29.2 29.5
Inventory of Raw Materials -5.9 -2.7 -8.3 -9.6
Inventory of Finished Goods -5.5 -3.0 -7.7 -9.9
Exports 10.9 5.3 24.8 26.2
Imports 13.9 9.1 22.8 24.3
Employment 11.2 9.7 15.6 17.6
Financial Situation (Overall) 28.5 25.6 42.2 46.4
Availability of Finance (from internal accruals) 23.0 18.1 31.8 32.1
Availability of Finance (from banks & other sources) 20.0 14.4 27.2 26.7
Availability of Finance (from overseas, if applicable) 9.8 5.1 16.9 20.2
Cost of Raw Material -49.3 -38.7 -51.0 -47.6
Cost of Finance -16.6 -10.2 -19.2 -20.2
Salary/ Other Remuneration -41.7 -17.4 -26.1 -27.4
Selling Price 8.0 0.2 17.2 17.1
Profit Margin -12.3 -10.2 9.9 13.6
Overall Business Situation 29.6 26.3 45.0 47.4

Table B: Business Expectations on Select Parameters for extended period – Net response
(per cent)
Parameters Round 106 Round 107
Q2:2024-25 Q3:2024-25 Q4:2024-25 Q1:2025-26
Overall Business Situation 45.0 47.4 53.6 53.0
Production 36.3 36.3 50.7 49.9
Order Books 35.2 33.3 47.2 48.5
Capacity Utilisation 29.2 29.5 47.2 46.0
Employment 15.6 17.6 28.1 29.7
Cost of Raw Materials -51.0 -47.6 -46.2 -46.2
Selling Prices 17.2 17.1 28.9 29.5

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
Q2:2023-24 1,223 45.2 11.2 43.6 34.0 63.0 5.0 31.9

58.0
Q3:2023-24 1,040 41.2 12.2 46.7 29.0 70.9 5.7 23.4

65.1
Q4:2023-24 1,354 46.6 12.3 41.1 34.4 62.3 4.2 33.6

58.1
Q1:2024-25 1,351 41.4 13.6 45.0 27.9 60.0 6.0 34.0

54.0
Q2:2024-25 1,300 37.6 14.7 47.7 22.9 40.7 4.3 55.0

36.3
Q3:2024-25           40.5 4.3 55.2

36.3
‘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
Q2:2023-24 1,223 41.1 10.4 48.5 30.7 63.0 4.8 32.2 58.1
Q3:2023-24 1,040 38.3 12.0 49.7 26.3 68.5 6.1 25.4 62.3
Q4:2023-24 1,354 43.4 11.6 44.9 31.8 61.8 6.0 32.1 55.8
Q1:2024-25 1,351 39.9 14.3 45.9 25.6 57.1 6.0 36.9 51.1
Q2:2024-25 1,300 35.3 15.8 48.9 19.5 39.4 4.2 56.3 35.2
Q3:2024-25           38.1 4.8 57.0 33.3
‘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
Q2:2023-24 1,223 8.6 11.6 79.8 3.1 10.9 9.2 79.9 -1.7
Q3:2023-24 1,040 8.6 11.9 79.4 3.3 9.7 8.5 81.8 -1.1
Q4:2023-24 1,354 5.5 11.7 82.8 6.2 8.2 9.3 82.5 1.1
Q1:2024-25 1,351 5.7 11.6 82.7 5.9 6.4 8.1 85.5 1.8
Q2:2024-25 1,300 3.1 11.1 85.8 8.0 4.2 6.0 89.8 1.8
Q3:2024-25           3.8 5.6 90.5 1.8
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
Q2:2023-24 1,223 38.2 8.7 53.0 29.5 51.8 5.2 42.9 46.6
Q3:2023-24 1,040 30.1 10.6 59.3 19.6 62.1 4.6 33.3 57.5
Q4:2023-24 1,354 34.9 9.9 55.2 24.9 51.2 4.6 44.2 46.7
Q1:2024-25 1,351 30.1 11.4 58.6 18.7 48.4 4.8 46.8 43.6
Q2:2024-25 1,300 25.1 10.0 65.0 15.1 33.2 4.0 62.9 29.2
Q3:2024-25           33.4 3.9 62.6 29.5
‘Increase’ in capacity utilisation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 5: Level of capacity utilisation (compared to the average in preceding 4 quarters)
(Percentage responses)
Quarter Total response Assessment Expectations
Above Normal Below Normal Normal Net response Above Normal Below Normal Normal Net response
Q2:2023-24 1,223 30.5 9.0 60.6 21.5 39.0 6.0 55.1 33.0
Q3:2023-24 1,040 26.2 9.4 64.4 16.7 36.1 6.1 57.8 30.1
Q4:2023-24 1,354 20.0 10.4 69.6 9.6 33.3 5.7 61.1 27.6
Q1:2024-25 1,351 16.2 11.7 72.1 4.6 22.5 7.1 70.4 15.4
Q2:2024-25 1,300 14.9 8.1 77.0 6.8 13.1 4.7 82.2 8.4
Q3:2024-25           14.4 3.8 81.8 10.5
‘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
Q2:2023-24 1,223 23.3 4.0 72.7 19.3 43.4 3.9 52.7 39.5
Q3:2023-24 1,040 25.1 4.7 70.2 20.4 42.7 3.2 54.1 39.5
Q4:2023-24 1,354 17.7 5.6 76.7 12.1 38.5 3.6 57.9 34.9
Q1:2024-25 1,351 9.8 3.2 87.0 6.6 27.2 4.7 68.1 22.5
Q2:2024-25 1,300 6.9 2.1 90.9 4.8 14.7 2.5 82.8 12.3
Q3:2024-25           12.8 1.5 85.7 11.3
‘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
Q2:2023-24 1,223 27.7 10.0 62.3 17.7 57.9 4.4 37.7 53.5
Q3:2023-24 1,040 25.1 13.5 61.3 11.6 58.1 5.0 36.9 53.1
Q4:2023-24 1,354 26.4 10.7 62.9 15.7 50.3 6.7 43.0 43.6
Q1:2024-25 1,351 23.7 12.8 63.4 10.9 41.6 5.5 52.9 36.1
Q2:2024-25 1,300 18.4 13.2 68.4 5.3 29.2 4.4 66.4 24.8
Q3:2024-25           31.2 5.0 63.9 26.2
‘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
Q2:2023-24 1,223 25.5 8.2 66.3 17.2 55.8 3.2 41.0 52.6
Q3:2023-24 1,040 23.2 8.7 68.0 14.5 54.8 3.9 41.3 51.0
Q4:2023-24 1,354 21.6 7.8 70.6 13.8 45.2 4.2 50.6 41.0
Q1:2024-25 1,351 21.6 7.7 70.7 13.9 35.2 4.1 60.7 31.1
Q2:2024-25 1,300 17.6 8.5 73.8 9.1 25.7 3.0 71.3 22.8
Q3:2024-25           28.0 3.6 68.4 24.3
‘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
Q2:2023-24 1,223 11.5 5.3 83.2 -6.1 33.0 4.0 63.1 -29.0
Q3:2023-24 1,040 12.9 4.1 83.0 -8.9 30.9 3.6 65.6 -27.3
Q4:2023-24 1,354 13.3 6.0 80.7 -7.3 27.4 1.7 70.9 -25.7
Q1:2024-25 1,351 11.9 6.0 82.1 -5.9 20.2 3.9 75.9 -16.3
Q2:2024-25 1,300 8.8 6.1 85.1 -2.7 10.7 2.3 87.0 -8.3
Q3:2024-25           11.9 2.3 85.8 -9.6
‘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
Q2:2023-24 1,223 11.7 4.5 83.7 -7.2 33.2 4.4 62.4 -28.8
Q3:2023-24 1,040 14.0 4.5 81.5 -9.5 31.4 3.3 65.3 -28.2
Q4:2023-24 1,354 12.4 6.0 81.7 -6.4 27.3 2.0 70.7 -25.3
Q1:2024-25 1,351 11.9 6.4 81.7 -5.5 20.1 3.9 75.9 -16.2
Q2:2024-25 1,300 9.5 6.5 84.0 -3.0 10.3 2.6 87.1 -7.7
Q3:2024-25           12.1 2.2 85.8 -9.9
‘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
Q2:2023-24 1,223 25.1 7.1 67.7 18.0 43.5 3.0 53.5 40.5
Q3:2023-24 1,040 25.1 6.9 67.9 18.2 42.5 3.7 53.8 38.8
Q4:2023-24 1,354 21.7 4.9 73.4 16.8 41.7 2.2 56.1 39.5
Q1:2024-25 1,351 18.5 7.3 74.1 11.2 31.3 2.2 66.5 29.1
Q2:2024-25 1,300 15.9 6.2 77.9 9.7 17.7 2.1 80.2 15.6
Q3:2024-25           19.3 1.6 79.1 17.6

‘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
Q2:2023-24 1,223 41.6 10.7 47.7 30.9 60.2 3.9 35.9 56.3
Q3:2023-24 1,040 36.8 11.2 52.0 25.6 68.7 5.1 26.2 63.5
Q4:2023-24 1,354 45.0 10.1 44.9 34.8 58.2 4.0 37.8 54.2
Q1:2024-25 1,351 40.9 12.4 46.7 28.5 59.2 5.2 35.6 54.0
Q2:2024-25 1,300 37.5 11.9 50.6 25.6 44.7 2.5 52.8 42.2
Q3:2024-25           49.1 2.7 48.1 46.4
‘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
Q2:2023-24 1,223 38.4 5.1 56.6 33.3 53.3 2.2 44.4 51.1
Q3:2023-24 1,040 32.8 6.9 60.3 26.0 60.2 2.6 37.3 57.6
Q4:2023-24 1,354 37.5 4.7 57.8 32.8 49.6 2.9 47.6 46.7
Q1:2024-25 1,351 31.6 6.5 61.9 25.1 46.6 3.0 50.4 43.6
Q2:2024-25 1,300 24.1 4.7 71.2 19.4 32.0 2.1 66.0 29.9
Q3:2024-25           32.4 1.2 66.5 31.2
‘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
Q2:2023-24 1,223 37.1 6.3 56.6 30.8 54.4 2.1 43.5 52.3
Q3:2023-24 1,040 30.6 6.9 62.5 23.7 61.6 2.5 35.9 59.1
Q4:2023-24 1,354 35.9 6.0 58.0 29.9 49.3 2.0 48.7 47.4
Q1:2024-25 1,351 29.5 6.5 64.0 23.0 47.7 2.9 49.4 44.8
Q2:2024-25 1,300 23.5 5.4 71.1 18.1 33.0 1.2 65.9 31.8
Q3:2024-25           32.9 0.8 66.3 32.1
‘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
Q2:2023-24 1,223 34.9 5.7 59.4 29.1 50.5 1.5 47.9 49.0
Q3:2023-24 1,040 28.8 5.6 65.5 23.2 58.2 2.5 39.3 55.8
Q4:2023-24 1,354 31.2 5.1 63.6 26.1 46.5 2.1 51.4 44.5
Q1:2024-25 1,351 25.9 5.9 68.3 20.0 43.2 2.8 54.0 40.5
Q2:2024-25 1,300 18.7 4.3 77.0 14.4 28.7 1.4 69.9 27.2
Q3:2024-25           27.4 0.7 72.0 26.7
‘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
Q2:2023-24 1,223 24.3 5.7 69.9 18.6 52.4 2.0 45.7 50.4
Q3:2023-24 1,040 20.2 6.0 73.9 14.2 56.4 2.9 40.7 53.5
Q4:2023-24 1,354 21.2 5.2 73.6 15.9 45.3 1.4 53.4 43.9
Q1:2024-25 1,351 16.2 6.5 77.3 9.8 35.9 2.7 61.5 33.2
Q2:2024-25 1,300 9.4 4.3 86.4 5.1 18.1 1.2 80.7 16.9
Q3:2024-25           20.6 0.4 79.0 20.2
‘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
Q2:2023-24 1,223 33.0 6.6 60.4 -26.4 56.4 2.2 41.5 -54.2
Q3:2023-24 1,040 29.2 6.8 64.0 -22.5 58.5 3.6 37.9 -54.9
Q4:2023-24 1,354 31.3 6.5 62.3 -24.8 48.8 2.9 48.3 -45.9
Q1:2024-25 1,351 23.3 6.7 70.0 -16.6 40.3 4.1 55.6 -36.3
Q2:2024-25 1,300 14.3 4.1 81.6 -10.2 22.1 2.9 75.0 -19.2
Q3:2024-25           22.2 2.0 75.8 -20.2
‘Decrease’ in cost of finance is optimistic. Footnote ‘@’ given in Table 1 is applicable here. The column heads, namely ‘Increase’ and ‘Decrease’ in data releases for rounds 82-87 were interchanged and should be read as above.

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
Q2:2023-24 1,223 49.3 5.5 45.3 -43.8 60.6 2.4 37.0 -58.3
Q3:2023-24 1,040 41.8 8.4 49.7 -33.4 67.8 2.8 29.3 -65.0
Q4:2023-24 1,354 50.2 6.3 43.5 -43.8 57.0 2.9 40.1 -54.2
Q1:2024-25 1,351 53.9 4.6 41.5 -49.3 55.9 3.1 40.9 -52.8
Q2:2024-25 1,300 44.5 5.8 49.8 -38.7 52.1 1.1 46.9 -51.0
Q3:2024-25           49.2 1.6 49.3 -47.6
‘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
Q2:2023-24 1,223 32.3 3.5 64.2 -28.8 49.8 0.5 49.7 -49.3
Q3:2023-24 1,040 30.3 4.1 65.7 -26.2 47.3 1.7 51.0 -45.6
Q4:2023-24 1,354 26.1 1.8 72.1 -24.3 42.9 0.9 56.2 -42.0
Q1:2024-25 1,351 42.9 1.2 55.9 -41.7 52.9 0.9 46.2 -51.9
Q2:2024-25 1,300 18.8 1.4 79.8 -17.4 26.7 0.6 72.7 -26.1
Q3:2024-25           27.8 0.3 71.9 -27.4
‘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
Q2:2023-24 1,223 22.3 10.6 67.1 11.7 46.9 5.4 47.7 41.4
Q3:2023-24 1,040 22.0 11.9 66.1 10.2 45.2 5.2 49.6 40.1
Q4:2023-24 1,354 18.9 10.8 70.3 8.1 40.4 5.6 54.0 34.8
Q1:2024-25 1,351 18.5 10.5 71.0 8.0 30.5 5.7 63.8 24.7
Q2:2024-25 1,300 10.9 10.7 78.4 0.2 20.3 3.1 76.5 17.2
Q3:2024-25           19.3 2.2 78.5 17.1
‘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
Q2:2023-24 1,223 21.9 17.4 60.7 4.5 43.8 8.1 48.1 35.7
Q3:2023-24 1,040 20.5 19.1 60.4 1.4 45.5 9.7 44.8 35.8
Q4:2023-24 1,354 17.2 20.6 62.1 -3.4 40.3 9.5 50.2 30.8
Q1:2024-25 1,351 13.0 25.3 61.7 -12.3 30.4 10.4 59.2 20.0
Q2:2024-25 1,300 12.2 22.4 65.4 -10.2 16.7 6.8 76.4 9.9
Q3:2024-25           19.4 5.8 74.9 13.6
‘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
Q2:2023-24 1,223 46.0 11.8 42.2 34.3 65.0 4.3 30.7 60.7
Q3:2023-24 1,040 40.6 12.0 47.4 28.6 73.1 5.2 21.7 67.9
Q4:2023-24 1,354 47.2 11.3 41.4 35.9 62.5 4.2 33.3 58.3
Q1:2024-25 1,351 42.7 13.1 44.2 29.6 62.0 5.5 32.5 56.5
Q2:2024-25 1,300 39.7 13.3 47.0 26.3 47.4 2.5 50.1 45.0
Q3:2024-25           51.2 3.9 44.9 47.4
‘Better’ Overall Business Situation is optimistic. Footnote ‘@’ given in Table 1 is applicable here.

Table 23: Business Sentiments4
Quarter Business Assessment Index (BAI) Business Expectations Index (BEI)
Q2:2023-24 115.0 132.5
Q3:2023-24 113.9 135.4
Q4:2023-24 114.2 130.3
Q1:2024-25 110.8 127.2
Q2:2024-25 108.3 119.1
Q3:2024-25   120.3

1 The survey results reflect the respondents’ views, which are not necessarily shared by the Reserve Bank.

2 Results of the previous survey round were released on the Bank’s website on August 08, 2024.

3 Net Response (NR) is the difference between the percentage of respondents reporting optimism and those reporting pessimism. It ranges between -100 to 100. Any value greater than zero indicates expansion/optimism and any value less than zero indicates contraction/pessimism. In other words, 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.e., I+D+E=100). For example, increase in production is optimism whereas decrease in cost of raw material is optimism.

4 For each survey round, two summary indices are computed – one based on assessment [viz., Business Assessment Index (BAI)] and another based on expectations [viz., Business Expectations Index (BEI)]. Each index is a composite indicator calculated as a simple average of nine business parameters, where each parameter is derived as a weighted net response, weights being the share of industry groups in gross value added (GVA). The nine parameters 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.


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