Business activity may not touch pre-COVID-19 levels before March 2021: Survey
Business activity is unlikely to touch pre-COVID-19 levels before March 2021, and there is a need for the government to step in and give a "push" to the economy as it has not done enough till now, a multi-sector survey conducted by a rating agency said on Monday.
Smaller businesses have reported more stress than larger ones in the survey of over 600 companies conducted by CARE Ratings between August 25 and September 13.
The economy is set to contract by over 10 percent as per some estimates during 2020-21, which is bound to have an impact on businesses as well. The government has announced additional spends of under 2 percent to help the economy, which has been called as too little by some quarters.
"Majority of the participants said the government has not done enough for the revival of their sector and they expect more support from the government," the rating agency said.
In the survey, 72 percent of the respondents said the government should do more for revival of their industry and were pinning their hopes on sops like deferment of statutory dues, credit enhancements or guarantees, and even tax subsidies, the survey said.
The agency said the survey has revealed a "mixed picture" from an overall perspective, with two-thirds of those polled saying they expect to hit the pre-COVID-19 levels only in March 2021, while construction, real estate, and service sector companies feel they will do so only in the next fiscal.
There has been a pickup in activity lately but there is a need for standardisation in the unlock process without having localised lockdowns, the survey participants, which included chief executives and chiefs of finance at companies and investors, said.
Companies in the construction, real estate, manufacturing and power sectors said they were facing problems because of the return of migrant labourers back to their villages, it said.
The small business segment reported more pain, because of the migrant labour issue, than larger enterprises, it said, with over a third of the former saying migrant labourers have not returned to work.
Some businesses said lack of clarity on loan moratorium guidelines by the Reserve Bank of India (RBI) is among the factors that have severely affected the performance of companies in their sector.
Over half of the respondents across small and large businesses said there would be a rise in non-performing assets for banks from their sector due to the impact of COVID-19, adding that it would trigger consolidation moves over the next six months.