The rise in self-assurance is mainly attributed to the easing of lockdown restrictions from June 2020, which supported the resumption of financial activities.
The self-assurance of Indian industries substantially rose in the second quarter of the present fiscal year 2020-21. CARE Ratings’ Industry Confidence Index enhanced sequentially by a powerful 63.9 per cent and by 19 per cent on-year to 96 in the course of the fiscal’s second quarter. The rise in self-assurance is mainly attributed to the easing of lockdown restrictions from June 2020, which supported the resumption of financial activities. This, in turn, aided the customer demand and also the business operations to run at larger capacities, Care ratings stated in a report. The self-assurance index had touched a low of 58 in the initially quarter due to Covid-19 induced lockdown restrictions.
The industry’s self-assurance has touched a level of 96 just after a gap of 5 quarters. Earlier, it had contracted to the variety of 62-93 in FY20 due to sustained financial slowdown in the course of the year. In the survey carried out by the rating agency, it was located a majority of industries amongst the 47 industries surveyed suffered worsened revenues, rates and modified credit ratio in Q2.
However, it is to be noted that the quantity of industries that showed an improvement in key parameters improved in the quarter. The index of enhanced responses touched 114 in Q2, from 61 in Q1 even though the index of worsened responses fell from 179 in Q1 to 126 in Q2. However, the industries connected to textiles, roads & highways, and gems & jewellery remained in the worsened category for all the 6 parameters regarded in the course of Q2 FY21. The six parameters have been revenues, operating margin, rates, modified credit ratio, interest coverage ratio, and outlook.
Meanwhile, in the wake of the coronavirus pandemic, the Modi government launched the Atmanirbhar Bharat package that incorporated numerous measures for the industries. One such measure was an further Rs 10,200 crore provided for capital expenditure and industrial expenditure. The government stated that the move would advantage green power firms along with domestic firms producing defence gear.