MANU/RPRL/0112/2015

Ministry : Reserve Bank of India

Department/Board : RBI

Press Release No. : 2015-2016/637

Date : 10.09.2015

RBI releases the Monthly Bulletin for September 2015

The Reserve Bank of India today released the September 2015 issue of its monthly Bulletin. In addition to Speeches by the Top Management and Current Statistics, this issue includes four articles: (1) Consumer Confidence Survey- Q2:2014-15 to Q1:2015- 16; (2) Position of Order Books, Inventories and Capacity Utilisation for the Quarters October 2013 to March 2015; (3) Private Corporate Investment: Growth in 2014-15 and Prospects for 2015-16; and (4) Monthly Seasonal Factors of Select Economic Time Series.

1. Consumer Confidence Survey - Q2:2014-15 to Q1:2015-16

The Consumer Confidence Survey (CCS) provides an assessment of the perception of around 5,400 respondents spread across six metropolitan cities viz., Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi. The survey captures qualitative information on a 3-point scale viz., improve, remain same, or worsen on questions pertaining to economic conditions, income, spending, prices and employment prospects. The responses are obtained in two parts, viz., current situation as compared with a year ago and expectations for a year ahead. This article analyses trends based on the last four rounds (Q2:2014-15 to Q1:2015-16) of the CCS. The survey results of each quarter have been released regularly on the RBI website. The survey results reflect views of the respondents and are not necessarily shared by the Reserve Bank of India.

Main Findings:

• The two Consumer confidence indices, viz., current situation index and future expectation index exhibited improvement over the last one year, although slight moderation was observed in the June 2015 round.

• Significant improvement in the positive perceptions on economic conditions, spending and price levels, was observed during Q2:2014-15 and Q4:2014-15. However, perceptions on income and employment scenario showed decreasing trend over the same period.

• The optimism regarding future economic conditions, income and employment scenario, as in the past, has consistently been higher than that relating to current situation.

• The association between current spending and current inflation was seen to have further strengthened during the last one year.

2. Position of Order Books, Inventories and Capacity Utilisation for the Quarters October 2013 to March 2015

The Reserve Bank conducts Order Books, Inventories and Capacity Utilisation Survey (OBICUS) on a quarterly basis among manufacturing sector companies in India. This article analyses the movement in the order books, inventories and capacity utilisation of select companies during the 6-quarter period from Q3:2013-14 (i.e., October-December 2013) to Q4:2014-15 (i.e., January-March 2015).

Main Findings:

• Average new orders of sample companies recorded impressive growth, on a yearon-year basis, during the reference period till Q2:2014-15, this was however not sustained subsequently. Their growth contracted to a considerable extent in Q3:2014-15 followed by a marginal contraction in Q4:2014-15.

• Average raw material inventory to sales ratio and average finished goods inventory to sales ratio fluctuated in the range of 22-25 per cent and 17-19 per cent, respectively during the period. Both the ratios rose in Q4:2014-15 from the previous quarter and stood at a higher level, as compared to the position a year ago.

• Poor demand conditions were also reflected in the lower capacity utilisation (CU) in Q3:2014-15. The CU rose by more than 3 percentage points to 75.2 per cent in Q4:2014-15, partly due to seasonality coupled with pick up in the production of consumer non-durable items.

3. Private Corporate Investment: Growth in 2014-15 and Prospects for 2015-16

This article captures capital expenditure (investment in fixed assets) intentions of the companies in private and joint business sector, based on their financing details, in order to assess changes in business sentiments. The estimate of capital investment likely to be incurred during the current financial year is based on time phasing details of the investment intentions of the companies which have raised funds from banks/Financial Institutions (FIs) or through External Commercial Borrowings (ECBs)/ Foreign currency convertible bonds (FCCBs) and domestic equity issues. Capital expenditure envisaged from pipeline projects is also estimated for the year 2015-16.

Main Findings:

• In 2014-15, the total envisaged cost of projects receiving finance through banks/FIs or ECB/FCCB or equity issues aggregated ` 1,459 billion as against ` 2,148 billion in 2013-14. It covers 328 projects with the envisaged project cost of ` 876 billion receiving sanction for financial assistance from banks/FIs, 478 projects with total costs of ` 572 billion contracting ECBs/FCCBs and 24 projects raising resources through equity issues of ` 11 billion.

• An analysis of the industrial pattern of projects shows that investment plans in 2014-15 were led by 'Power' and 'Metal' followed by 'Transport Equipment & Parts', 'Telecom' and 'Textile' industries. There was a sharp reduction in both, the number and share of 'New projects' in the total cost of projects sanctioned in 2014-15. The number of high value projects also decreased.

• During the previous five year period (2010-11 to 2014-15) majority of the projects financed by Banks/FIs were taken up in the states of Odisha, Maharashtra, Uttarakhand, Gujarat, Andhra Pradesh and Chhattisgarh, accounting for nearly 61 per cent of the envisaged project cost of that period.

• Taking into consideration the time phasing details of the investment intentions indicated by the companies covered in this study, estimated capital expenditure was ` 1,933 billion in 2014-15; this was 27 per cent lower than the revised estimate of 2013-14. However, a turnaround is expected in the months ahead owing to improved macroeconomic conditions coupled with positive measures taken for unclogging stalled projects and timely implementation of supportive polices and reforms.

4. Monthly Seasonal Factors of Selected Economic Time Series

The article presents estimated monthly seasonal factors of selected 85 major macroeconomic series, broadly covering five major sectors, namely, Monetary and Banking Indicators (17 series), Prices (WPI/CPI) (29 series), Industrial Production (29 series), External sector (3 series) and Service Sector Indicators (7 series) based on monthly data for the period 2005-06 to 2014-15. The seasonal factors have been estimated using X-13ARIMA-SEATS software package, developed by the US Bureau of Census, taking care of Diwali as major festival as well as trading day effects.

Main Findings:

I. Analysis of Seasonal Peak and Trough

Analysis of average seasonal factor over the last 10 years (2005-06 to 2014-15) revealed that the seasonal peak occurred during March-May for majority of monetary and banking indicators and for industrial production. Seasonal variation was found to be minimal in CPI (AL, RL and IW) and WPI (All commodities). WPI-food articles was however found to have higher seasonal variation with seasonal peak in October due to festive season. On the other hand, WPI-manufactured products indicated low variation in seasonal factors and seasonal peak occurred in May. Among service sector indicators, the seasonal peak and trough were observed in March and September respectively for most of the series.

II. Indicators with High and Low Seasonality

Seasonal variation was found to be higher among sub-group (NIC 2 digit) level items of IIP- manufacturing. Further 'coal production', 'sale of commercial motor vehicle' and 'production of commercial motor vehicle' indicated very high level seasonal variation. On the other hand, among WPI items, 'WPI-non-food articles', 'WPI-manufactured products', 'WPI-non-food manufacturing products', 'WPI-milk', 'WPI-edible oils', and 'WPI-meat' indicated very low variation in seasonal factors.

III. Changing Seasonality

Seasonal fluctuation of monetary and banking series was found to have moderated during the last 10 years (2005-06 to 2014-15). Among broad categories of IIP, seasonal variation increased for 'consumer goods' (durables and non-durables), 'mining', 'manufacturing' and 'electricity'. Further similar variation was observed in 'cement production', 'coal production', 'crude oil production' and 'petroleum refinery production'. Within WPI items, seasonal variation of 'food items' increased significantly during the period under study. During 2014-15, the seasonal peak and trough was found to have shifted by one month for majority of series, though seasonal variation remained the same as compared to the last 5 years (2009-10 to 2013-14).

Alpana Killawala
Principal Chief General Manager