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Business sentiment shows demand back to pre-Covid Feb 2020 level: IIM-A survey

By Our Representative
The latest Business Inflation Expectations Survey (BIES) by the Indian Institute of Management-Ahmedabad (IIM-A) has suggested that even though the lockdown of the economy due to the ongoing Covid-19 pandemic has been partially lifted, 28% of the firms still expect significant (over 6%) cost increase as compared to the same time last year.
Around 54% of the firms believe that the current cost increase is ‘3.1% and above’ as compared to the same time last year – marginally up from 52% reported in August 2020, the BIES report says, noting “This is primarily driven by the firms indicating moderate cost increase (between 3.1% and 6%) in this round.” It adds, “However, overall cost perceptions data shows early signs of easing of cost pressures.”
Coming to sales, the report says, “Over 51% of the firms in September 2020 report that sales are ‘much less than normal’ as against 59% firms reported in August.” This suggests, it underlines, “There are clear signs of firms’ sales gradually getting back to the pre-Covid February 2020 level.”
“Similar sentiments are expressed for profit margin. Firms are moving from ‘much less than normal’ profit to ‘somewhat less than normal’ and 'about normal' profit category gradually”, the report states, adding, “Overall business sentiments indicate that demand is back to the pre-Covid February 2020 level.”
Thus, is says, “Over 54% of firms in the sample in September 2020 reported ‘much less than normal’ profit as against 57% in August 2020.” It adds, “Firms are moving from ‘much less than normal’ profit to ‘somewhat less than normal’ and ‘about normal’ profit category gradually.”
A monthly exercise begun in May 2017, BIES seeks to get a probabilistic assessment of uncertainty in the economy, even as providing an indirect assessment of overall demand condition of the economy in order to provide macro data required for policy making. Companies are selected primarily from the manufacturing sector. The latest September 2020 survey is based on the responses from around 1,100 companies.

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