New Delhi: The optimism level among chief financial officers about India’s financial and macro-economic conditions during the third quarter this year has witnessed a decline of 15 per cent and touched record low level, according to a survey. Dun & Bradstreet Composite CFO Optimism Index showed a decline of 15 per cent on quarter-on-quarter basis to 74.2 during Q3 2020, bringing the index to a record low.
The survey covered nearly 350 chief financial officers (CFOs), who were asked a set of questions regarding the financial performance of their companies and the overall macroeconomic scenario for the corporate sector in the forthcoming period. “The steady rise in total infected cases and the spillover effects of the lockdown measures have undermined the optimism levels. Moreover, the psychological impact of COVID-19 is having a bearing on the confidence levels of both businesses and consumers alike,” said Arun Singh, Global Chief Economist, Dun & Bradstreet.
Further, the lack of space for demand stimulus coupled with subdued consumer demand have constrained the pace of economic activity, Singh said. “This is reflected in the low optimism level of CFOs for profitability, liquidity and risk appetite which stood at a record low during Q3 2020. Low optimism level of businesses, in turn, has led to lower growth impulses,” he added.
As per the survey, the macroeconomic scenario sub-index value at 87.5 is the lowest in nearly seven years, as the index was at its lowest value of 77.5 during Q4 2013. The financial performance sub-index is at its lowest value of 67.1 during the third quarter this year. The percentage of CFOs expecting an increase in the operating margin (21 per cent) and liquidity position (20 per cent) of their companies is the lowest ever. Besides, CFOs indicating a need for raising short-term funds (22 per cent) and long-term funds (15 per cent) is also at the lowest level, as per the survey.
The index encapsulated the optimism level of CFOs surveyed on 12 parameters such as liquidity position, level of financial risk on company’s balance sheet, risk appetite, need for raising short term and long term funds, domestic as well as global macroeconomic scenario and level of financial risks for the corporate sector as a whole, among others.
