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Sales, profits of Indian firms 'deteriorate', yet no significant increase in cost pressures

By Our Representative 

The Indian Institute of Management-Ahmedabad's (IIM-A's) latest Business Inflation Expectations Survey (BIES), a monthly exercise, has said that while cost perceptions data does not indicate significant increase of cost pressures, sales and profits of the Indian firms have deteriorated.
A report on the survey says, "The percentage of firms perceiving significant (over 6%) cost increase has remained unchanged around 33% during last two rounds Also, majority (over 27%) of the firms perceive that costs have gone up moderately – in the range of 3.1% to 6%."
However, the survey regrets, "About 61% of the firms are reporting ‘much less than normal’ or ‘somewhat less than normal’ sales in July 2023 – up from 56% reported in June 2023", adding, "The percentage of firms reporting ‘about normal’ sales has remained steady around 24% -- down from 26% reported in June 2023.
"Normal" means as compared to the average level obtained in the preceding three years, excluding the Covid-19 period, the report explains.
At the same time, the report says, "Around 69% of the firms are reporting profit ‘much less than normal’ or ‘somewhat less than normal’ in July 2023", suggesting, "Overall, the profit margins expectations have further deteriorated."
The IIM-A survey claims, it "provides ways to examine the amount of slack in the economy by polling a panel of business leaders." The questions posed include "questions about year-ahead cost expectations and the factors influencing price changes, such as profit, sales levels, etc."
Claiming to be "unique" as it "goes straight to businesses -- the price setters -- rather than to consumers or households, to understand their expectations of the price level changes", the report says, the survey "provides an indirect assessment of overall demand condition of the economy."
It insists, "Results of this Survey are... useful in understanding the inflation expectations of businesses and complement other macro data required for policy making", adding, "Companies are selected primarily from the manufacturing sector. The results are based on the responses of around 1,200 companies."



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