The recovery indicates a positive development for the manufacturing sector and the economy as a whole with the government’s emphasis on self-reliance.
With the opening up of the economy and ease in restrictions, manufacturing firms received ‘substantially higher new orders’ in Q2FY21.
The manufacturing sector’s aggregate level capacity utilisation (CU), a measure of productive efficiency, recovered to 63.3 percent in the September quarter (Q2FY21), after registering an unprecedented low of 47.3 percent in the June quarter (Q1FY21) in the wake of the COVID-19 pandemic, said the Reserve Bank of India’s (RBI’s) survey on manufacturing sector.
The survey, released on February 5, 2021, provides a synopsis of demand conditions in India’s manufacturing sector, giving valuable input for monetary policy formulation.
The recovery indicates a positive development for the sector and the economy as a whole with the government’s emphasis on self-reliance. The manufacturing sector was one of the hardest-hit sectors, recording a growth of (-) 1.7 percent in November 2020 as against (-) 66.6 percent growth in April-2020.
The 51st round of the Order Books, Inventories and Capacity Utilisation Survey (OBICUS) for July-September 2020 quarter covered 602 manufacturing companies. “Seasonally adjusted CU also increased to 64.1 percent in Q2FY21 from 47.9 percent in the previous quarter,” the report said.
With the opening up of the economy and ease in restrictions, manufacturing companies received “substantially higher new orders” in Q2FY21 as compared to the quarter in the previous year, data showed.
Likewise, sales too improved with the revival of the economy. The finished goods inventory (FGI) and raw material inventory (RMI) were almost back to their levels in Q2 of FY21, compared to the quarters in the previous year, as a result of which ratios of FGI and RMI to sales reported a fall.
