Discuss the need for an official survey of business expectations in India. How would it complement existing indicators like the PMI?

The 2026 Nobel Prize to Robert Hall and Michael Woodford recognised the microeconomic foundations of macroeconomic stabilisation [1]. Woodford's central point is that firms set today's prices according to what they expect tomorrow. India measures these expectations only partly, so a fuller official survey of business expectations is now needed.

Need for an official business-expectations survey

• Expectations are not anchored: In May 2026, households expected 9.3% inflation over the next year, against 7.8% perceived current inflation [4]. However, India has no official, numerical reading of the price expectations of firms, which actually set prices.
• Existing surveys show only direction: RBI's Industrial Outlook Survey reports net responses (share of optimists minus share of pessimists) from about 1,224 manufacturers [2]. The Services and Infrastructure Outlook Survey is also qualitative [3]. Both show whether firms are optimistic, not by how much they expect to raise prices.
• Short horizon: Firms are asked for their outlook only up to three quarters ahead [2]. Investment, wage and pricing contracts look further ahead.
• Coverage gaps: Panels of companies under-represent MSMEs and informal firms, which are hit first by food and fuel supply shocks.
• Policy feedback: Without firm-level numbers, the MPC cannot tell whether its forward guidance (signals about future policy) is changing pricing behaviour. That is the channel Woodford's work stresses [1].

How it would complement the PMI

• Timeliness vs depth: The HSBC India PMI is a private, monthly diffusion index that tracks month-on-month change [5]. It is fast but shallow. An official survey would add depth on a quarterly basis.
• Direction vs magnitude: The PMI says whether conditions are improving. An official survey would give numbers for expected price rises, wage growth and capex.
• Horizon: The PMI captures the near term. An official survey could ask for one-year and multi-year expectations.
• Transparency and breadth: A public methodology, a sample that includes MSMEs and state-level results would let analysts cross-check the private index.

Together, the PMI would serve as the early-warning signal and the official survey as the anchor-tracker. A joint RBI–MoSPI quantitative survey with a multi-year horizon and a representative MSME sample would let India apply the laureates' insight. That would strengthen the credibility of the inflation target set under the RBI Act and support stable growth (SDG 8).