IIM-A Survey Debunks Govt. of India Claims on Economy

The Indian Institute of Management-Ahmedabad's (IIM-A's) latest round of Business Inflation Expectations Survey (BIES) has found that sales and profit margins of Indian businesses have remained subdued despite tall claims by the government of India that the Indian economy is doing well. One of the reasons for conducting the study is that since the Russia-Ukraine war the world is facing increasing crises of fuel, and food grains. Even Panjab is affected by the Indian government’s ad hoc rules and permissions regarding various foodgrains. In such a scenario, the researchers asked, how can India be doing well? The survey was qualitative and not just based on quantitative data. It sought to examine the amount of slack in the economy by polling a panel of business leaders, asking them questions about year-ahead cost expectations and the factors influencing price changes, such as profit, sales levels, and so on. The survey went to businesses – the price setters – rather than to consumers or households, to understand their expectations of the price level changes. The survey says that about 56% firms are reporting ‘much less than normal’ or ‘somewhat less than normal’ sales in September 2023 – up from 52% reported in August 2023, even as the percentage of firms reporting normal and above normal sales has marginally declined to 45% in September 2023 from 47% reported in August 2023. In an unrelated development which will have an impact on all such independent surveys, the government of India has recently passed a notification giving itself absolute control on the Boards of all the IIMs and the appointment of their directors.