Alongside the
monetary policy statement, the RBI released the results of few forward looking
surveys. The surveys, especially the consumer confidence survey, highlight the
despondency prevailing in the economy. These surveys totally belie the
apologetic 25bps repo rate cut and argue for a "significant" policy
intervention.
1. Consumer
confidence survey
(i) Consumer
confidence weakened in September with both the current situation index (CSI)
and the future expectations index (FEI) recording declines.
(ii) Households’
sentiments on the general economic situation and the employment scenario
declined further, and they were less optimistic on their income over the year
ahead than in July 2019.
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(iii) Respondents perceived an increase in the price level over the last one year and a majority of them expect prices to rise further in the coming year; as a result, sentiments on overall spending as well as essential spending remain strong, though sentiments on discretionary spending weakened.
2. Survey of
Professional Forecasters on Macroeconomic Indicators
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Growth is expected to moderate in 2019-20 but improve in 2020-21. Consumer price inflation is expected to remain at or below 4.0 per cent till Q2:2020-21.
3. Industrial
Outlook Survey of the Manufacturing Sector for Q2:2019-20
(i) Respondents assessed
that there was a slump in order inflows, output and employment conditions in
Q2:2019-20.
(ii) On exports and
imports, there was waning optimism in Q2:2019-20.
(iii) Sentiments on the
overall financial situation reflected lower optimism on availability of finance
from internal accruals, bank finance and overseas sources in Q2:2019-20.
(iv) Cost pressures
emanating from interest payments on borrowings, purchase of raw materials and
salary expenses were assessed to have softened in Q2:2019-20, but manufacturers
were pessimistic about profit margins in view of slack demand and negative
sentiments on selling prices.
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(v) The Business Assessment Index (BAI) fell sharply to 92.5 in Q2:2019-20 from 108.4 in Q1:2019-20.
4. Order Books, Inventories
and Capacity Utilisation Survey on the Mfg sec – Q1FY20
(i) Capacity
Utilisation (CU): At the aggregate level, CU declined to 73.6 per cent in
Q1:2019-20 from 76.1 percent in Q4:2018-19, broadly tracking the de-trended
index of industrial production (IIP) (Chart 1).
Seasonally adjusted, CU increased by 0.3 percentage points to 74.8 per cent in
Q1:2019-20.
(ii) Order Books: Fewer
new orders were received in Q1:2019-20, marking the third successive quarter of
decline in new orders.
(iii) Finished Goods
Inventory (FGI) to Sales Ratio: The FGI to sales ratio rose for the second
consecutive quarter in Q1:2019-20, mainly reflecting moderation in sales as FGI
remained unchanged from the preceding quarter’s level.
(iv) Raw Material
Inventory (RMI) to Sales Ratio: The rise in RMI to sales ratio was on
account of increase in inventories and moderation in sales.
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