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Unlocking, Indian govt efforts showing results: survey
08 Jul '20
3 min read
Pic: Shutter Stock
The opening up of the Indian economy and implementation of the government economic package have started showing results on the ground and initial signs of improvement in the performance of businesses are now visible, according to the results of a survey conducted jointly by the Federation of Indian Chambers of Commerce and Industry (FICCI) and Dhruva Advisors.
But sustaining this improvement in the operational parameters of businesses will require continuous support from the government, particularly in the realm of strengthening market demand in the absence of which this initial recovery may fizzle out, the study said. The industry survey was conducted in June.
The results show while currently close to 30 per cent of the firms are operating at 70 per cent plus capacity utilisation, nearly 45 per cent of the firms expect capacity utilisation to be above 70 per cent in the near term.
Unlocking of the economy is starting to have a positive impact on exports, cash flows, order books and supply chains. Twenty two per cent of the respondents said that exports have improved in recent times. A quarter reported a positive impact of unlocking of the economy on order books and 21 per cent confirmed improvement in cash flows. Nearly 30 per cent of the firms are seeing their supply chains getting back on track, FICCI said in a press release.
In the April edition of this survey, only 5 per cent of the companies were expecting an increase in exports, 7 per cent had reported increase in order books and 10 per cent expected an improvement in cash flows.
The results show that on strategic issues, majority of the firms still plan to wait for 6-12 months to take decisions. In the April edition of the survey, 54 per cent of the companies had reported that they would look at mergers and acquisitions (M&A) in the long term. In June, this figure has moved to 75 per cent—a reflection of the recessionary conditions and fast changing business dynamics.
In terms of the challenges that firms foresee they will continue to face even during the unlocking phase, managing costs, weak demand and financial liquidity remain the top three items with 60 per cent, 59 per cent and 57 per cent reporting the same.
Some of the survey respondents have also alluded to the second wave of COVID-19 as a challenge they foresee that could affect businesses going ahead. A sudden stop on the imports from China, given the most recent developments, also figured in the feedback received as part of the survey on challenges that could impact businesses.
On the government economic package, only one in five companies said the Emergency Credit Line Guarantee Scheme has started yielding results. The interest rate reduction by banks has also benefitted just about a quarter of the firms with the gains being modest for most and in the range of 25-50 basis points.
But sustaining this improvement in the operational parameters of businesses will require continuous support from the government, particularly in the realm of strengthening market demand in the absence of which this initial recovery may fizzle out, the study said. The industry survey was conducted in June.
The results show while currently close to 30 per cent of the firms are operating at 70 per cent plus capacity utilisation, nearly 45 per cent of the firms expect capacity utilisation to be above 70 per cent in the near term.
Unlocking of the economy is starting to have a positive impact on exports, cash flows, order books and supply chains. Twenty two per cent of the respondents said that exports have improved in recent times. A quarter reported a positive impact of unlocking of the economy on order books and 21 per cent confirmed improvement in cash flows. Nearly 30 per cent of the firms are seeing their supply chains getting back on track, FICCI said in a press release.
In the April edition of this survey, only 5 per cent of the companies were expecting an increase in exports, 7 per cent had reported increase in order books and 10 per cent expected an improvement in cash flows.
The results show that on strategic issues, majority of the firms still plan to wait for 6-12 months to take decisions. In the April edition of the survey, 54 per cent of the companies had reported that they would look at mergers and acquisitions (M&A) in the long term. In June, this figure has moved to 75 per cent—a reflection of the recessionary conditions and fast changing business dynamics.
In terms of the challenges that firms foresee they will continue to face even during the unlocking phase, managing costs, weak demand and financial liquidity remain the top three items with 60 per cent, 59 per cent and 57 per cent reporting the same.
Some of the survey respondents have also alluded to the second wave of COVID-19 as a challenge they foresee that could affect businesses going ahead. A sudden stop on the imports from China, given the most recent developments, also figured in the feedback received as part of the survey on challenges that could impact businesses.
On the government economic package, only one in five companies said the Emergency Credit Line Guarantee Scheme has started yielding results. The interest rate reduction by banks has also benefitted just about a quarter of the firms with the gains being modest for most and in the range of 25-50 basis points.
Fibre2Fashion News Desk (DS)
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