India's business confidence down sharply amid COVID-19 outbreak

India's business confidence sharply deteriorated as demand took a hit during the prevalent second wave of COVID-19 outbreak, according to a survey conducted by an industry body and released Monday.

The Overall Business Confidence Index nosedived to 51.5 for the month of May after reporting a decadal high of 74.2 in the previous survey released in March, said a statement by Federation of Indian Chambers of Commerce and Industry.

India currently has a COVID-19 caseload of over 28 million, of which over 2 million are active cases with 329,100 deaths reported so far.

Around 70 percent of participants in the survey reported weak demand conditions as a bothering factor as compared to 56 percent in the preceding survey as household income was being severely impacted and past savings were already spent during the first wave of infections last year, said the statement.

Rising raw material cost was also a concern among the participants in the survey, among whom 31 percent saw a decline in better sales prospects compared to 66 percent in the preceding survey and thereby decline in higher profits.

The outlook on employment was seen deteriorating with only 19 percent respondents expressing optimism about hiring over the next two quarters compared to 35 percent in the preceding survey while exports prospects were also seen subdued.

Respondents called on the government to offer another fiscal stimulus to boost demand along with liquidity support and credit enhancement to medium, small and micro enterprises, said the statement.