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The Reserve Bank of India (RBI) has released the findings of its 46th round of the Services and Infrastructure Outlook Survey (SIOS) for the second quarter of 2025-26, highlighting how companies in these two key sectors view their business environment. The survey, conducted during Q2, reflects the views of 706 firms on demand conditions, costs, employment, and future expectations.
According to the RBI report, services sector firms observed an improvement in overall business conditions and turnover in the July-September quarter of 2025. Employment opportunities remained positive, with better access to finance during this period. However, while input costs increased, the pressure from salaries and finance costs eased, allowing many firms to record stronger sentiments regarding selling prices and profit margins. Looking ahead to Q3 of 2025-26, the services sector expressed greater optimism. Firms expect higher turnover, stronger demand, and growth in both full-time and part-time employment. Although wage bills, finance costs and input costs are projected to rise, the possibility of increasing selling prices is seen as a cushion for sustaining profit margins. The outlook remains upbeat until the first quarter of 2026-27, with businesses expecting demand and employment to stay strong, even as cost pressures persist. The report also noted that services companies indicated that with their current resources, they could expand capacity by offering an additional 10.7 per cent of services in the coming quarters. On the infrastructure side, firms assessed demand conditions as having improved during Q2 of FY25-26. Input costs, financing expenses, and salary payouts exerted higher pressure, but businesses still reported stronger growth in selling prices and profit margins. For the upcoming quarter, infrastructure companies remain hopeful of an improvement in the overall business situation, turnover, and employment. However, the RBI report noted that their confidence was somewhat lower than that recorded in the previous survey round. Input cost pressures are expected to moderate in Q3, though optimism about growth in selling prices and profit margins is less pronounced compared to the earlier quarter. Looking further ahead, infrastructure firms continue to remain positive about demand and employment prospects until Q1 of FY26-27. Input cost pressures, however, are expected to linger in the near term, with selling prices staying at an elevated level. (ANI)
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