The overall business confidence index plunges to around 20 points – 51.5 in the current cycle from 74.2 – due to the surge in Covid-19 infections, according to a survey.
The survey titled, ‘The business confidence of the FICCI ‘ the proportion of respondents citing a situation of low demand once again noted a significant increase.
“About 70 percent of respondents said weak demand was a hindering factor in the current survey, compared to 56 percent saying the same in the previous cycle. The corresponding number last year was 77 percent, ”the survey said.
With household income severely affected and past savings already depleted in the first wave of infections, demand conditions are expected to remain weak for longer this time around, he added.
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The survey was conducted during the month of April / May 2021 and measures respondents’ expectations for the period from April to September 2021. The survey covers participants from a wide range of sectors.
In the current survey, the proportion of respondents predicting better short-term sales prospects has dropped significantly to 31 percent, from 66 percent of respondents saying the same in the previous cycle.
He added that the proportion of respondents citing higher profits over the next six months fell to 16 percent in the latest survey, from 36 percent of respondents saying the same in the previous cycle.
In addition to the usual activity indicators, respondents were also asked to give their opinion on the impact of localized restrictions imposed by various state governments on their activities and subsequent measures taken by them to ensure business continuity.
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About 80% of participating companies said they were having problems doing business due to the new wave of restrictions. That’s less than 90 percent of respondents who said the same thing in the same poll last year.
“A majority of participating companies called for an extension of the moratorium on loans, repayment of principal and interest, for at least six more months,” the survey said.
Respondents also stressed the need to continue with liquidity support and credit enhancement measures for MSMEs, as announced the previous year.