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What is the News?
The 96th round of the Industrial Outlook Survey of the Manufacturing Sector for Q3 2021-22.
What is the Industrial Outlook Survey of the Manufacturing Sector?
Released by: Reserve Bank of India(RBI)
Purpose: To capture a qualitative assessment of the business climate and expectations for the ensuing quarter.
What does the 96th round of the Industrial Outlook Survey show?
The business confidence among Indian manufacturers is weakening amid the Omicron outbreak.
However, there is also demand for improvement in terms of production, new orders, capacity utilization, and jobs. But firms are still wary of high costs and prices.
What are the challenges the investors face?
Firstly, the share of private final consumption expenditure has declined to 57.5% of gross domestic product (GDP) in FY22 as against 60.5% in FY20. This has impacted demand and slowed down manufacturing.
Secondly, Global supply chain disruptions, high freight costs and rising crude prices have also led to continued pressure on input costs.
Lastly, prevailing geopolitical tensions over Ukraine could result in continued pressure on oil prices, thereby increasing production costs.
What are the positive signals for investors?
There is an increase in mobility trend for retail and recreation—places such as restaurants, cafes, shopping centres. This means more people may be venturing out to markets and malls, which in turn could result in fuelling domestic demand.
Source: This post is based on the article “What Industrial Outlook Survey findings show” published in Livemint on 23rd February 2022.
