Businesses improving, India Inc expecting better results in 2021: Survey

Illustration by Binay Sinha

The opening up of the economy and implementation of a broad set of measures under the Atmanirbhar Bharat package have led to a continuous improvement over time in the performance of businesses, with India Inc expecting even better results in 2021, a joint survey conducted by FICCI and Dhruva Advisors showed on Monday.

According to the survey, the prospect of a vaccine for COVID-19 early next year has improved the confidence level of businesses, with almost 74 per cent of the survey participants saying that they foresee a significant positive impact on their business once the vaccine is made available.

The survey conducted in December 2020 showed that COVID-19 induced travel restrictions have limited the ability of companies to undertake business operations efficiently and 74 per cent of the survey participants validated this. To overcome this challenge and maintain business operations, companies have leveraged digital tools of communication.

Given the benefits of use of technology, 64 per cent of the surveyed companies said that moving forward, they will use a mix of travel and virtual meetings even after the situation becomes normal.

Another major outcome of COVID-19 is the likely shift in global supply chains away from China to other economies. Nearly 70 per cent of the survey participants said that India could benefit from this move and they expected a fair share of manufacturing to shift from China to India in the near future.

To capitalise on the opportunities that could come India's way, there is a need to strengthen India's manufacturing ecosystem. Under the Atmanirbhar Bharat package, the government has introduced several measures to address the immediate pain points of the economy as well as steps to improve India's manufacturing competitiveness. These measures have been well received by the industry, with 45 per cent of the companies rating the latest set of announcements made under Atmanirbhar Bharat package 3.0 as 'good to excellent'.

The results of the December 2020 survey also indicate that there has been a further improvement in the performance of companies compared with the situation in August 2020.

With improvement seen in the economy, nearly 40 per cent of the surveyed companies are currently operating at a capacity utilisation level of over 70 per cent, compared with 30 per cent of the companies in August 2020, the FICCI-Dhruva survey said.

Other indicators of improving business performance in the December 2020 survey are related to order books and exports. Nearly 50 per cent of the companies have reported that they have seen an increase in their order books and about 40 per cent said that their exports have increased. In the August 2020 survey, the corresponding figures were 44 per cent and 30 per cent respectively.

Even as visible signs of improvement in performance of businesses appear, the impact of COVID-19 still lingers. The survey results show that businesses continue to face challenges on account of weak demand (59 per cent), managing costs (54 per cent) and financial liquidity (48 per cent). Given this, the survey participants expect both government and the RBI to continue with their support measures even next year. There is a strong demand that the upcoming budget must prioritise growth-oriented measures, including a cut in direct tax rates.

Commenting on the survey results, Uday Shankar, President, FICCI, said: "The results of the survey are encouraging and highlight the ongoing industrial and economic recovery. This momentum needs to be built upon and now all eyes are on the upcoming budget. The government has been seeking growth-inducing ideas and we have shared several suggestions. The context of this budget is completely different due to an unprecedented social and economic challenge. We are sure that the government will take bold steps to respond to these challenges."

Dinesh Kanabar, CEO, Dhruva Advisors LLP, said: "The survey results portray a continued improvement in the business environment in India, with weak demand and managing costs still remains India Inc's key challenges. The vaccine news has infused optimism among businesses. Given the impact of the pandemic on the economy, the Union Budget 2021-22 is one of the most anticipated budgets."

--IANS

sn/tsb


(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel