Confederation of Indian Industries (CII)

  • Category
    Economy
  • Published
    5th Aug, 2020

Context

Confederation of Indian Industries recently said that rural lending reviving, agri given hope of recovery.

About

  • According to the Confederation of Indian Industries there are early signs of a V-shaped recovery in the economy in the immediate aftermath of the lockdown, driven mostly by agriculture and rural lending, as well as positive trends in FMCG, pharma and even construction.
  • However, the uncertainty of mini lockdowns and unnecessarily wide containment zones continue to affect business operations.
  • Terming the agriculture sector a “beacon of hope”, CII noted that rural lending by non-banking financial companies (NBFCs) is at about 80% of the usual levels.
  • Stressed sectors include aviation, hotels and commercial vehicles, which show no signs of recovery yet.
  • However, the information technology and health sectors are likely to hold steady even if they do not show much growth.
  • An increase in people eating at home and a greater demand for sanitation and hygiene products is likely to drive 15-20% growth in the FMCG sector.
  • With most construction sites resuming operations, CII is predicting a bounce-back in the sector which employs the largest number of people outside farming.
  • CII also added that commercial real estate is holding up on lease renewals, though new leases are not being signed.

Reasons for the recovery

  • Positive indicators include GST collections, railway freight traffic, petrol consumption, peak power demand and electronic toll collections, as well as expectations of a bumper harvest in the wake of a normal monsoon.

Suggestions

  • In order to nurture the nascent signs of recovery, it is important to mitigate the uncertainties that are currently prevailing regarding restrictions. Corporates are unable to plan beyond a horizon of a few weeks, which is in turn affecting all operations.
  • Given that it was not possible to predict the course of the pandemic, it recommended a dashboard approach, where the progression of infections would trigger predictable responses in a way that would reduce uncertainty and boost consumer and industry confidence.
  • Containment zones need to be limited to micro areas to ensure that supply chains function seamlessly; and business activities must be allowed to function by removing the uncertainty associated with imposing mini lockdowns.

Confederation of Indian Industries (CII)

  • It is a non-government, not-for-profit, industry-led and industry-managed organization.
  • It was founded in 1895,its headquarters is in New Delhi.
  • It works to create and sustain an environment conducive to the development of India, partnering industry, Government and civil society, through advisory and consultative processes.

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