Industrial Outlook Survey (IOS)

Overall business sentiments in the Indian manufacturing sector surged to a record low at 55.2 in Q2: 2020-21.

Note: Published bi-monthly by the RBI. Updated to the month of September 2020 (published on October 9, 2020)

Brief Overview

The Industrial Outlook Survey (IOS) of the manufacturing sector has been conducted by the Reserve Bank of India (RBI) since 1998 on a quarterly basis. The survey mainly seeks to capture the qualitative assessment on business environment for the current quarter and their expectations for the next quarter.

The manufacturing sector companies with paid-up capital of over Rs 5 million are selected and responses through questionnaires are collected. The qualitative responses are based on a set of indicators relating to demand conditions, financial conditions, employment and price situation.

Aggregation of the responses are mainly done in two ways: The Net responses (NR), i.e, the difference between proportions of optimistic (increase) and pessimistic (decrease) responses are calculated. Generally, the values for NR are between -100 and +100. A higher value of NR shows an improved optimism. The second measure of the results is compiled into a composite known as the Business Expectations Index (BEI) which is calculated as the weighted NRs of nine business indicators- Overall business situation, production, order books, inventories of raw material and finished goods, profit margins, capacity utilization and exports. The Business Assessment Index (BAI) is also calculated on the basis of the above nine indicators. BAI/BEI is scaled between 0 to 200 and it indicates the overall business environment in the economy for each quarter. Any value above 100 indicates an improving condition and values below 100 indicates deteriorating conditions in the economy.

There are two kinds of BEI computed- i) based on the assessment of current quarter (BEI-Assessment) and ii) based on expectations for the next quarter (BEI-Expectation). The survey thus provides an overall state of the manufacturing sector and the entire economy.

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Next Release Date: Feburary 4th, 2021