The Reserve Bank of India’s industrial outlook survey has suggested a turnaround in the business sentiment.
The results of the survey mirror the outcome of various other business expectations surveys, which indicated that the earlier decline in overall business sentiment had reversed, suggesting a gradual return of optimism. The RBI’s survey suggests turnaround in economic sentiments during the first two quarters of 2009-10.
For the manufacturing companies in the private sector, the business expectations indices based on an “assessment for April-June 2009” and on “expectations for July-September 2009” improved sharply over the previous quarter, when the indices were at their lowest level, the RBI survey said.
For most of the indicators like production, order book position, capacity utilisation and financial situation, the decline in sentiment has been arrested and reversed, the RBI said in its macroeconomic report released on the eve of the first quarter monetary policy review.
The price expectations show that more companies are expecting rise in input and output prices as compared with the previous quarters. The outlook on raw material cost seems to be complex, as 40.6 per cent of the respondents reported increase in price of raw materials against 37.2 per cent in the preceding quarter.
Additionally, the share of companies expecting price increase also has increased to 35.8 per cent. Optimism level for selling prices (ie, increase in selling price) for both assessment and expectations improved as compared with the last survey round mainly on account of increase in the proportion of ‘no change in selling price’.