New Delhi (NVI): Industry body FICCI has conducted a survey to assess the impact of COVID-19 crisis on economic activities which says that 70 per cent of the surveyed firms are expecting degrowth in sales in the fiscal year 2020-21.
Covid-19 pandemic is severely impacting the Indian economy and the industry. The magnitude and speed of collapse in economic activity that India has seen over the last few weeks is unprecedented.
In the ‘FICCI–Dhruva survey’ almost 72% of the respondents have reported that covid-19 is having a ‘high to very high’ level of impact on their business.
Further, a substantial majority of the respondents do not foresee a positive demand outlook for their business in this fiscal, with 70% of the surveyed firms expecting a degrowth in sales in the fiscal year 2020-21, according to the survey.
A vast majority also foresee a reduction in their business cashflows and company’s order book. The survey also highlights that unless a substantive economic package is announced by the government immediately, permanent impairment of a large section of the industry is foreseen, which may lose the opportunity for many businesses to come back to life again.
The survey report further says that jobs are also at risk over the coming months as nearly three-fourths of the surveyed firms said that they may look at some reduction in manpower in their respective companies.
The findings were revealed in a joint nationwide survey of businesses conducted by FICCI and Dhruva Advisors over the last week. The survey was conducted to elicit how enterprises are getting impacted in terms of their business operations; what steps are being planned to maintain business continuity; what is their outlook for business in the FY 2021 and what are their expectations from the government in this hour of crisis.
The survey saw participation from almost 380 companies from across sectors and has thrown up some very important results and insights that should be useful for the policymakers as they plan for the next steps of their integrated approach to support Indian industry.
FICCI President Dr Sangita Reddy said: “The Covid-19 pandemic is causing deep economic harm and could reverse the gains made in the industrial economy over many decades. There is a need to render immediate and sizable support to industry to protect people, jobs, and enterprises. Industry members are reeling under severe financial stress and are in urgent need of ample liquidity to ensure business continuity. We are hopeful that the government will introduce a series of measures in quick succession to support demand ensure business continuity. This would be a confidence booster and we hope sentiment will improve following the economic package.”
Dinesh Kanabar, CEO, Dhruva Advisors said: “The broad-based survey shows the deep impact that Covid-19 is likely to leave on the Indian economy in the short to medium term. Clearly, the plans prepared by businesses on fund-raising, investments and expansion are being pushed back. Businesses will focus on cost optimisation and supply chain management. There is a significant expectation from the Government for a financial stimulus and providing liquidity, including by way of tax refunds and cheaper credit, so that the economy returns to normalcy faster.”
The survey also highlights the impact covid-19 has had on companies’ expansion plans. Results show that in respect of approved expansion plans, 61% expect to defer such expansions for a period upto 6 or 12 months, while 33% percent expect to defer approved expansion plans for more than 12 months. Further, while 60% of the surveyed firms have deferred their fund-raising plans for the next 6-12 months, nearly 25% of the firms have shelved the same.
