Corporate India's business confidence sharply deteriorated due to the devastating second COVID-19 wave, with nearly three-fourths of the participants reporting weak demand conditions, according to a leading industry group's latest survey.
The steep drop from a decade high reading in the previous round follows a record surge in infections in April and May, which has seen many states reintroduce limited lockdowns and multiple brokerages cutting economic growth expectations.
The overall Business Confidence Index nosedived to 51.5 in the current round compared with 74.2 in the previous round, the Federation of Indian Chambers of Commerce and Industry (FICCI) said on Monday.
"Since a much larger proportion of the population has been impacted in the current wave, measures to support demand revival will be crucial for the economy to recover from the latest pandemic induced shock," FICCI said.
The survey, which gauged expectations of the respondents for the period April to September, drew responses from about 180 companies across a wide array of sectors with a turnover ranging from 10 million rupees to 600 billion rupees ($137,839.78-$8.27 billion).
India's earnings season for the fourth quarter ended March 31 has been a mixed bag, with only 18 of the 42 Nifty 50 companies that have reported so far beating estimates, according to Refinitiv Eikon data.
However, ratings agency Fitch on Monday said it expects the impact of the second wave to be less severe on corporates than in 2020, with most companies' credit profiles being supported by their strong market positions.
India is set to announce gross domestic product data for the January-to-March quarter at 1200 GMT on Monday.
