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Business activity unlikely to touch pre-COVID-19 levels before March 2021: CARE Ratings
Sep-22-2020

A multi-sector survey conducted by CARE Ratings has showed that business activity is unlikely to touch pre-COVID-19 levels before March 2021. It added that 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. The smaller businesses have reported more stress than the larger ones in the survey of over 600 companies conducted by the agency between August 25 and September 13.

The rating agency said ‘majority of participants said the government has not done enough for the revival of their sector and they expect more support from the government’. As per the survey, 72% of the respondents said the government should do more for revival of their industry and are pinning hopes on sops like deferment of statutory dues, credit enhancements or guarantees and even tax subsidies. It said the survey has revealed a ‘mix 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.

CARE Ratings said there has been a pick-up in activity lately but there is a need for standardisation in the unlock process without having the localised lockdowns, the survey participants, which included chief executives, chiefs of finance at companies and investors. It noted that companies in the construction, real estate, manufacturing and power sectors said they are facing problems because of the return of migrant labourers back to their villages. Besides, it said the small business segment reported more pain because of the migrant labour issue than the larger enterprises, with over a third of the former saying the migrant labourers have not returned back to work.

Some businesses also said lack of clarity on loan moratorium guidelines by the Reserve Bank of India (RBI) is among the factors that have severely affected performance of companies in their sector. Over half of the respondents across small and large businesses said there will be rise in the non-performing assets for banks from their sector due to the impact of COVID-19, and also feel that it may trigger consolidation moves over the next six months.

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