The Reserve Bank of India (RBI) in the 76th round of its Industrial Outlook Survey (IOS) has indicated a decline in business sentiments. In the survey which was conducted during October-December 2016, RBI has said that business sentiments of the Indian manufacturing sector deteriorated in the third quarter of the current financial year and are likely to decline in the fourth quarter. The survey elicited response from 1221 manufacturing companies and was conducted during October-December 2016.
In third quarter, RBI has indicated slight moderation in the sentiments in demand condition for the second successive quarter. It said that in respect of several parameters like order books, capacity utilisation and imports, the level of optimism was lower in third quarter than second quarter. However, the level of optimism was more about the export performance, while optimism on production remained unchanged for the third quarter. The sentiment on profit margin remained largely unchanged due to reduced pessimism about the cost of finance and the cost of raw.
On business sentiments outlook in fourth quarter, the survey stated that they had largely followed similar pattern. However, in respect of demand condition (Order Books, Production), the outlook deteriorated. Further it said that pressure from rise in cost of raw material was expected to bring down profit margin. Improved sentiments were expressed in pending orders, exports, and cost of finance.