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

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.

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 .

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 the Civil Aviation Minister.

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."

Global NGO slams India for media clampdown during conflict, downplays Pakistan

A global civil rights group, Civicus has taken strong exception to how critical commentaries during the “recent conflict” with Pakistan were censored in India, with journalists getting “targeted”. I have no quarrel with the Civicus view, as the facts mentioned in it are all true.

Whither SCOPE? Twelve years on, Gujarat’s official English remains frozen in time

While writing my previous blog on how and why Narendra Modi went out of his way to promote English when he was Gujarat chief minister — despite opposition from people in the Sangh Parivar — I came across an interesting write-up by Aakar Patel, a well-known name among journalists and civil society circles.

Remembering Vijay Rupani: A quiet BJP leader who listened beyond party lines

Late evening on June 12, a senior sociologist of Indian origin, who lives in Vienna, asked me a pointed question: Of the 241 persons who died as a result of the devastating plane crash in Ahmedabad the other day, did I know anyone? I had no hesitation in telling her: former Gujarat chief minister Vijay Rupani, whom I described to her as "one of the more sensible persons in the BJP leadership."

A conman, a demolition man: How 'prominent' scribes are defending Pritish Nandy

How to defend Pritish Nandy? That’s the big question some of his so-called fans seem to ponder, especially amidst sharp criticism of his alleged insensitivity during his journalistic career. One such incident involved the theft and publication of the birth certificate of Masaba Gupta, daughter of actor Neena Gupta, in the Illustrated Weekly of India, which Nandy was editing at the time. He reportedly did this to uncover the identity of Masaba’s father.

Why India’s renewable energy sector struggles under 2,735 compliance hurdles

Recently, during a conversation with an industry representative, I was told how easy it is to set up a startup in Singapore compared to India. This gentleman, who had recently visited Singapore, explained that one of the key reasons Indians living in the Southeast Asian nation prefer establishing startups there is because the government is “extremely supportive” when it comes to obtaining clearances. “They don’t want to shift operations to India due to the large number of bureaucratic hurdles,” he remarked.

Search This Blog