The industrial survey conducted by the Reserve Bank of India (RBI) throws some light on why Indian businessmen worried about the future and what are they worried about the most. The survey sought a response from 1,231 companies.
The business sentiment indices show that Indian manufacturing companies are satisfied with the current environment, but are cautious on the prospects of the coming quarter. The expectations index has dropped to 112.8 for the September quarter from 113.5 for the June quarter.
Companies are extremely pessimistic about the cost of funding and are also less optimistic than before on availability of funding. This shows the dent from the ongoing liquidity crisis among non-bank finance companies.
Besides funding, companies are worried that they won’t be able to sell their wares like they used to, and therefore inventories would pile up leading to cut in production. This is already visible in the auto industry. The optimism over employment, exports, and use of capacity have declined, says the survey.