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The Sales Managers Index: India

Released: February 21, 2017

Indian Sales Fall as Demonetisation Effects Hit Small and Medium Size Businesses

  • Business Confidence Index falls by 30% in 3 months
  • Panel members report falling sales but strong market fundamentals persist
  • Price inflation continues to grow

The Indian Sales Managers Index (SMI) for February, shows the after effects of the December demonetisation policy which was intended to crack down on corruption and “black money”. The February Headline SMI has fallen to an index level of 60.2 in unadjusted terms, the lowest level in over 3 years.

Managers are reporting a big drop in monthly sales for both the consumer and industrial sectors, with small to medium size businesses that predominantly deal with cash transactions, being hardest hit. Furthermore, the cash policy has had the effect of forcing up the overall Prices Charged Index (53.6) to levels not seen since spring 2013, when the Rupee was valued at ₹53.92 against the USD, it is now trading at ₹67.29. Some panel members are expecting the currency to continue to fall. Higher inflation in the consumer goods and services sectors, represented by the Prices Charged Index for Services (54.7), is pushing the valuation of the Rupee to even greater levels of undervaluation on the World Price Index (WPI) scale. The WPI under valuation level for the Indian Rupee is currently -41% using February data. Businesses are taking advantage of the situation created by such an undervalued currency, with the majority of panel members feeling that the current FX level is becoming advantageous for their businesses.

Overall, February SMI data suggests an erratic situation for Indian businesses as they meet market challenges with considerably lower levels of confidence, slower monthly sales and higher prices caused by the currency situation, however the economy is still growing rapidly.


Headline Sales Managers' Index



Market Growth Index
Sales Growth Index



Prices Charged Index





                                                         

World Price Index under/overvaluation February 2017






About India SMI Data



The Sales Managers Index provide the earliest monthly data on the speed and direction of Indian economic activity.

Key advantages of the India SMI:
  • The SMI provides the first indication each month of the speed and direction of economic growth in India.
  • The SMI provides the most complete indication of growth, covering all private sector activity.
  • The SMI is based on a key occupational group - uniquely able to sense changes in business activity levels.
  • The SMI is composite index of business confidence, market growth, sales, prices charged and staffing levels.
  • The SMI is a diffusion index, any index value above 50 indicates growth and below 50 indicates contraction.

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