Inflation has firmed up and the monetary policy responses so far in reining in prices have been mixed, but that has not prevented the RBI from expressing optimism on the industrial outlook front. According to its latest Industrial Outlook Survey of manufacturing companies in the private sector, conducted in February 2008, the business expectations indices based on assessment for January-March 2008 and expectations for April-June 2008 increased by 6 per cent and 3.9 per cent respectively over the previous quarters. “But the indices declined by 3.8 per cent and 3.4 per cent respectively over the corresponding quarter of the previous year,” the RBI said.The improvement in expectations index for April-June 2008 over the previous quarter emanated from higher net responses for major parameters of the survey such as working capital requirement, availability of finance, production, order books, capacity utilisation, employment, exports, imports, selling prices and profit margins than in the previous quarter. However, even with this improvement, the performance of the manufacturing sector in the first quarter of 2008-09 is expected to be considerably lower than that of the corresponding quarter of the previous year. A much higher proportion of respondents expected a decline in the overall business and financial situation and exports, and an increase in the prices of raw material than in Q1 of 2007-08.
