Context: Recently, the Reserve Bank of India (RBI) has launched the 49th round of quarterly Order Books, Inventories and Capacity Utilisation Survey (OBICUS) of the manufacturing sector.The latest round has a reference period as January-March 2020.

Key Points

• The RBI has been conducting the OBICUS of the manufacturing sector on a quarterly basis since 2008.
• The survey represents the movements in actual data on order books, inventory levels of raw materials and finished goods and capacity utilization.
• Inventory is the amount of goods held by a company.
• Capacity utilization refers to the manufacturing and production capabilities that are being utilized by a nation or enterprise.
• The survey also gives out the ratio of total inventories to sales and ratio of raw material (RM) and finished goods (FG) inventories to sales in percentages.
• These are considered as important indicators to measure economic activity, inflationary pressures and the overall business cycle.
• Trend analysis is calculated for the survey based on quantitative data received from companies regarding new orders, backlog orders at the beginning of the quarter, pending orders at the end of the quarter.
• The survey provides valuable input for monetary policy formulation.
• The company level data collected during the survey are treated as confidential and never disclosed.
• In the 48th round of the OBICUS for the quarter October-December 2019 as many as 704 manufacturing companies were covered. As per the survey:
• Capacity Utilisation (CU) had declined to 68.6% in the third quarter of 2019-20 from 69.1% in the previous second quarter.
• Also, orders received in the third quarter(Q3:2019-20) were lower compared with the previous second quarter as well as with the level of 2018-19.