Early indicators suggest a slowdown in economy, warns IIM-A survey of 1300 businesses

The latest Business Inflation Expectations Survey (BIES) of the Indian Institute of Management-Ahmedabad (IIM-A) has suggested that while business inflation expectations have decreased significantly by 29 basis points, falling to 4.21% in July 2024 from 4.50% in June 2024, and the average inflation expectation among firms over the past 12 months stands at 4.44%, overall, "early indicators suggest a slowdown in the economy."

The survey, carried out monthly at the Misra Centre for Financial Markets and Economy, IIM-A, said, the sales expectations for July 2024 continue to show a subdued trend. Also, approximately 64% of firms reported ‘somewhat lower than normal’ or diminished profits in July 2024, an increase from of 59% reported in May and June 2024. Approximately 1,300 companies -- primarily from the manufacturing sector -- participated in the survey.

The BIES claims to be a tool to assess economic slack by surveying business leaders about their short and medium-term inflation expectations. The monthly survey focuses on year-ahead cost projections and the factors impacting price fluctuations, such as profit levels and sales volumes. The survey targets businesses -- the price-setters -- rather than consumers, offering insight into their price level expectations.

A key benefit of the BIES is said to be its ability to provide a probabilistic evaluation of inflation expectations, which also reflects the uncertainty surrounding them. Additionally, it indirectly gauges overall economic demand conditions. The findings from this survey are claimed to be instrumental in grasping business inflation expectations and supplementing macroeconomic data essential for policy formulation.

According to the survey, the cost perception data for July 2024 suggest a moderation in cost pressures; however, the percentage of firms experiencing significant cost increases (over 10%) has slightly risen to 15%, up from about 13% in June 2024. The percentage of firms reporting moderate to significant cost increases (3.1% to 10.0%) has decreased to 46% in July 2024, down from 49% recorded in June 2024, it said.

At the same time, the survey regretted, sales expectations remained lacklustre in July 2024, with about 32% of firms reporting ‘much less than normal’ sales, a rise from 28% in June 2024. Additionally, approximately 56% of firms have indicated ‘somewhat less than normal’ or lower sales in July 2024, an increase from 54% during the March to June 2024 period.

The survey noted, around 64% of firms report ‘somewhat lower than normal’ or reduced profits in July 2024, an uptick from 59% noted in May and June 2024. Here, 'normal' refers to the average profit levels observed over the previous three years, excluding the Covid-19 period. "Overall, expectations regarding profit margins remain subdued in July 2024", it concluded.

Comments

Ahmedabad's civic chaos: Drainage woes, waterlogging, and the illusion of Olympic dreams

In response to my blog on overflowing gutter lines at several spots in Ahmedabad's Vejalpur, a heavily populated area, a close acquaintance informed me that it's not just the middle-class housing societies that are affected by the nuisance. Preeti Das, who lives in a posh locality in what is fashionably called the SoBo area, tells me, "Things are worse in our society, Applewood."

RP Gupta a scapegoat to help Govt of India manage fallout of Adani case in US court?

RP Gupta, a retired 1987-batch IAS officer from the Gujarat cadre, has found himself at the center of a growing controversy. During my tenure as the Times of India correspondent in Gandhinagar (1997–2012), I often interacted with him. He struck me as a straightforward officer, though I never quite understood why he was never appointed to what are supposed to be top-tier departments like industries, energy and petrochemicals, finance, or revenue.

PharmEasy: The only online medical store which revises prices upwards after confirming the order

For senior citizens — especially those without a family support system — ordering medicines online can be a great relief. Shruti and I have been doing this for the last couple of years, and with considerable success. We upload a prescription, receive a verification call from a doctor, and within two or three days, the medicines are delivered to our doorstep.

Powering pollution, heating homes: Why are Delhi residents opposing incineration-based waste management

While going through the 50-odd-page report Burning Waste, Warming Cities? Waste-to-Energy (WTE) Incineration and Urban Heat in Delhi , authored by Chythenyen Devika Kulasekaran of the well-known advocacy group Centre for Financial Accountability, I came across a reference to Sukhdev Vihar — a place where I lived for almost a decade before moving to Moscow in 1986 as the foreign correspondent of the daily Patriot and weekly Link .

Environmental report raises alarm: Sabarmati one of four rivers with nonylphenol contamination

A new report by Toxics Link , an Indian environmental research and advocacy organisation based in New Delhi, in collaboration with the Environmental Defense Fund , a global non-profit headquartered in New York, has raised the alarm that Sabarmati is one of five rivers across India found to contain unacceptable levels of nonylphenol (NP), a chemical linked to "exposure to carcinogenic outcomes, including prostate cancer in men and breast cancer in women."

Dalit rights and political tensions: Why is Mevani at odds with Congress leadership?

While I have known Jignesh Mevani, one of the dozen-odd Congress MLAs from Gujarat, ever since my Gandhinagar days—when he was a young activist aligned with well-known human rights lawyer Mukul Sinha’s organisation, Jan Sangharsh Manch—he became famous following the July 2016 Una Dalit atrocity, in which seven members of a family were brutally assaulted by self-proclaimed cow vigilantes while skinning a dead cow, a traditional occupation among Dalits.

Tracking a lost link: Soviet-era legacy of Gujarati translator Atul Sawani

The other day, I received a message from a well-known activist, Raju Dipti, who runs an NGO called Jeevan Teerth in Koba village, near Gujarat’s capital, Gandhinagar. He was seeking the contact information of Atul Sawani, a translator of Russian books—mainly political and economic—into Gujarati for Progress Publishers during the Soviet era. He wanted to collect and hand over scanned soft copies, or if possible, hard copies, of Soviet books translated into Gujarati to Arvind Gupta, who currently lives in Pune and is undertaking the herculean task of collecting and making public soft copies of Soviet books that are no longer available in the market, both in English and Indian languages.

Boeing 787 under scrutiny again after Ahmedabad crash: Whistleblower warnings resurface

A heart-wrenching tragedy has taken place in Ahmedabad. As widely reported, a Boeing 787 Dreamliner plane crashed shortly after taking off from the city’s airport, currently operated by India’s top tycoon, Gautam Adani. The aircraft was carrying 230 passengers and 12 crew members. As expected, the crash has led to an outpouring of grief across the country. At the same time, there have been demands for the resignation of Prime Minister Narendra Modi, Home Minister Amit Shah, and Civil Aviation Minister Venkaiah Naidu. The most striking comment came from BJP MP Subramanian Swamy, who stated : "When a train derailed in the 1950s, Lal Bahadur Shastri resigned. On the same morality, I demand PM Modi, HM Amit Shah, and Civil Aviation Minister Naidu resign so that a free and fair inquiry can be held. All that Modi and his associates have been doing so far is gallivanting, which must stop." Amidst widespread mourning, some fringe elements sought to communalize the tragedy. One post ...

Revisiting Gijubhai: Pioneer of child-centric education and the caste debate

It was Krishna Kumar, the well-known educationist, who I believe first introduced me to the name — Gijubhai Badheka (1885–1939). Hailing from Bhavnagar, known as the cultural capital of the Saurashtra region of Gujarat, Gijubhai, Kumar told me during my student days, made significant contributions to the field of pedagogy — something that hasn't received much attention from India's education mandarins. At that time, Kumar was my tutorial teacher at Kirorimal College, Delhi University.

Search This Blog