A survey by industry body the Federation of Indian Chambers of Commerce and Industry (FICCI) has revealed sharpest moderation in the confidence level of India Inc since the global financial crisis of 2008-09 as the coronavirus disease (COVID-19) outbreak has adversely affected their businesses. It noted that the overall business confidence index has fallen to 42.9 in the current round as against 59 reported in the last survey. It added that the index value had stood at 37.8 in the second quarter of 2008-09, when India was battling the effects of the global financial crisis.
The industry chamber felt that sharp moderation both in current conditions as well expectations about the future were responsible for pulling the overall index value down during the quarter. As per its Business Confidence Survey, timely action by the government will enable quicker return to normalcy for the domestic economy. It also demanded a further 100 basis points reduction in the repo rate by the RBI. It also made a case for financial package for the entire industry (especially micro, small and medium enterprises) from the government in the form of subsidies, policy support, tax holidays, and special dispensation of funds to sustain employment levels before the COVID-19 pandemic.
FICCI further stated that immediate measures need to be taken to instill confidence in decision makers of banks. It also said simultaneously, efforts must be made to make the entire lending process foolproof which will ultimately enable swifter decisions. It noted that labour market reforms is the need of the hour and must be taken up on priority. It further recommended that the Reserve Bank of India (RBI) should undertake direct purchase of corporate bonds and reduce the key short-term lending rate (repo) by another 100 basis points.