Recently, the Reserve Bank of India (RBI) has sparked headlines by initiating the 49th round of its quarterly Order Books, Inventories and Capacity Utilisation Survey (OBICUS) within the manufacturing sector. This latest iteration revolves around data from the reference period of January to March 2020.
The Role of RBI’s OBICUS in Analysing the Manufacturing Sector
The OBICUS survey is a long-established initiative, regularly conducted by the RBI since 2008. The survey serves as a lens through which the fluctuations in order books, raw material inventory levels, finished goods, and capacity utilization are observed.
Inventory refers to the quantity of goods that a company possesses at a given time, while capacity utilization denotes the level of manufacturing and production capabilities used by a country or enterprise. These variables play crucial roles in the operation of the manufacturing sector.
Interpreting Ratios and Indicators
Additionally, the OBICUS survey offers the ratios of total inventories to sales, as well as the ratios of raw material (RM) and finished goods (FG) inventories to sales, expressed in percentages. These values are recognized as influential indicators that gauge economic activity, inflationary pressures, and the general flow of the business cycle.
Trend analysis is another essential aspect of the survey. It relies on quantitative data received from companies, such as new orders, backlog orders at the beginning of the quarter, and pending orders at the end of the quarter.
Significance of Survey Data in Monetary Policy Formulation
The data generated by the OBICUS survey hold significant value in the realm of monetary policy formulation. They provide pivotal insights to policymakers who need to understand the dynamics of the manufacturing sector. To maintain the integrity of the process, all company-level data gathered throughout the survey are treated with strict confidentiality, ensuring that no specific details are disclosed.
Findings from the 48th Round of OBICUS
The 48th round of the OBICUS, which spanned the quarter from October to December 2019, included data from as many as 704 manufacturing companies. The survey findings revealed that Capacity Utilisation (CU) had seen a decrease to 68.6% in the third quarter of 2019-20, down from 69.1% in the preceding second quarter. Furthermore, orders received during this third quarter were less than those garnered in both the previous second quarter and across the 2018-19 level.