Economy

Overall Business Confidence Index plunges due to pandemic

Our Bureau New Delhi | Updated on May 31, 2021

With household income being severely impacted, demand conditions are expected to remain weak

The Overall Business Confidence Index plunges by around 20 points – 51.5 in the current round as compared to 74.2– due to surge in Covid-19 infections, according to a survey.

The survey titled, ‘FICCI’s Business Confidence’ the proportion of respondents citing weak demand situation once again noted a significant increase.

“Around 70 per cent participants reported weak demand conditions as a bothering factor in the current survey as compared to 56 per cent stating the same in the previous round. The corresponding number a last year was 77 per cent,” said the survey.

With household income being severely impacted and past savings already drawn down during the first wave of infections, demand conditions are expected to remain weak for longer this time around, it added.

Also read: Indian economy faces resilience test amid risks from Covid-19

The survey was conducted during the month of April/May 2021 and gauges expectations of the respondents for the period April to September 2021. The survey covers participants belonging to a wide array of sectors.

In the current survey, the proportion of respondents anticipating better sales prospects in the near term declined significantly to 31 per cent compared to 66 per cent respondents stating likewise in the previous round.

It further added that the proportion of respondents citing higher profits over next six months declined to 16 per cent in the latest survey as compared to 36 per cent respondents stating the same in the previous round.

Besides the usual business indicators, the respondents were also asked to share their opinion on the impact of localised restrictions imposed by various state governments on their businesses and subsequent measures undertaken by them for ensuring business continuity.

Also read: India’s economy likely accelerated in Jan-Mar, before Covid-19 wave

Around 80 per cent of the participating companies said that they were facing issues in carrying out their business amidst the fresh bout of restrictions. This is lower than 90 per cent participants who stated likewise in the same survey last year.

“A majority of the participating companies called for extension of the moratorium on loans, principal and interest payments, for at least another six months,” said the survey.

Respondents also highlighted the need for continuation of liquidity support and credit enhancement measures to MSMEs as announced in the previous year.

Published on May 31, 2021

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