New Delhi [India], September 9 (ANI): Weak demand continues to be the key bottleneck for companies as nearly 68 per cent of the companies surveyed recently by industry body FICCI and Dhruva Advisors reported this to be their biggest challenge.
In fact, 41 per cent of the companies said their sales in August were less than 50 per cent of their sales in the same month last year. Another 21 per cent said that sales in August were between 50 to 75 per cent of the sales recorded in August last year.
FICCI and Dhruva Advisors said the contraction seen in GDP during the first quarter of current fiscal is a matter of great concern and clearly underlines the need for a major stimulus to energise and strengthen demand in the economy.
As the Indian economy is progressively opening up in phases, businesses are seeing improvement in some of their operational parameters.
However, the setback that has been caused to members of corporate India on account of COVID-19 will require a much longer period before one sees an improvement in performance on a sustained basis.
Till that time, government and regulatory institutions must continue lending strength to businesses through all possible additional measures as well as improvising the already announced set of measures basis feedback from all stakeholders.
"Reviving the economy requires a sustained effort, especially when we have seen that in the first quarter our GDP has suffered a major blow," said FICCI President Sangita Reddy.
"In the absence of a major fiscal push on the demand side, we could end up being stuck in a quagmire of low demand and low-income cycle. If we have to return to the positive growth trajectory, the time for bold and decisive action is now," she said.
In June, however, only 25 per cent of the companies had reported that unlocking of the economy had a positive impact on their order books. In August, 44 per cent of the companies reported that their order books have improved post opening up of the economy, according to the latest survey.
In June, only 21 per cent of the companies had reported that unlocking had a positive impact on their cashflows, In August, 51 per cent of the surveyed companies said that their cashflows have improved.
In June, 29 per cent of the companies had said that unlocking of the economy had a positive impact on their supply chains. In August, this figure jumped to 58 per cent.
Dinesh Kanabar, CEO of Dhruva Advisors, said the survey results are a reflection of the improving state of the Indian economy after the staggered unlocking.
"In the next phase, it is imperative that the critical business parameters continue to improve in the future and are fast-tracked with government support and stimulus. This will help the overall Indian economy to be back on the normal growth trajectory faster," he said.
Kanabar said the government, by enhancing financial liquidity in the system, should specially focus on addressing weak demand which has emerged as the foremost challenge being confronted by India Inc. (ANI)