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Manufacturers expect improvement in business situation in FY22, shows RBI survey

Respondents expect more pressure from cost of finance, purchase of raw materials and salary outgo in Q1 of FY22.

April 07, 2021 / 08:22 PM IST
Representative image

Representative image

Indian manufacturers perceive further improvement in production and overall business situation in the second and third quarter of the financial year 2022, according to the Reserve Bank of India’s (RBI) latest industrial outlook survey.

While respondents expect the capacity utilisation and employment conditions to improve, the input cost pressure to continue, albeit with marginal easing, and selling prices to harden gradually, they said.

Today, the RBI released the results of the 93rd round of the Industrial Outlook Survey conducted during January-March 2021. The survey encapsulates a qualitative assessment of the business climate by Indian manufacturing companies for Q4 of FY 21 and their expectations for Q1 of FY22.

In all, 967 companies responded in this round of the survey, the RBI said.

Owing to uncertainty driven by the COVID-19 pandemic, an additional block was included in this round of the survey for assessing the outlook on key parameters for two quarters ahead as well as three quarters ahead, the RBI said.

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Q4 FY 21 sentiments

Manufacturing companies assessed further strengthening of production, order books and employment during Q4 of FY 21. Sentiments on financial situation improved in terms of availability of finance from banks, internal accruals and overseas sources, the RBI survey said.

It added that manufacturers perceived higher cost pressures mainly stemming from purchase of inputs and salary expenses and some increase in selling prices during the quarter. In Q2 of FY 22, the survey respondents expect production volumes, new orders and job landscape to strengthen and there is optimism on the overall financial situation, the RBI survey showed.

Further, survey respondents expect more pressure from cost of finance, purchase of raw materials and salary outgo in Q1, FY22, and they said selling prices as well as profit margins are expected to increase in Q1 of FY22, the survey found.

Most industries were severely affected during COVID-19. The measures announced by the government, including the Rs 3 lakh crore MSME loan scheme, and the liquidity measures announced by the RBI, helped alleviate the stress on industries.

To help the economy, the RBI cut key rates by 250 bps since February 2019. At the monetary policy on April 7, the central bank left the key rates unchanged citing uncertainty on growth-inflation fronts.
Moneycontrol News
first published: Apr 7, 2021 08:22 pm

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