Emphasising the need for another fiscal package, a Ficci survey on Monday said the business sentiment in the country has been deeply impacted due to the second wave of coronavirus infections.
It said that the overall business confidence index has nosedived and stood at 51.5 in the current round after reporting a decadal high value of 74.2 in the previous survey round.
According to FICCI's Business Confidence Survey, there was a "sharp deterioration" in the optimism level of corporate India vis-a-vis the previous survey.
"Worsening current conditions, as well as muted expectations about the near-term prospects on the back of a sweeping second wave of coronavirus infections, pulled down the overall index value by over 20 points,' it said on Monday.
The majority of the participants stated weak demand conditions and increasing raw material costs as a bothering factor in the current survey.
"With household income being severely impacted and past savings are already drawn down during the first wave of infections, demand conditions are expected to remain weak for longer this time around," it added.
On the fiscal side, "companies unanimously felt the need for another fiscal package", focusing majorly on addressing the demand side, it added.
Demand boosting measures such as direct income support to rural as well as urban poor, income tax reductions for the middle class, and temporary reductions in indirect taxes must be urgently considered, the survey suggested.
Further, it said that only 19 per cent of respondents were optimistic about better hiring prospects over the next two quarters.
Export prospects are also worsened noticeably in the current round with only 27 per cent of respondents indicating higher outbounds shipments.
Participants said that only a massive vaccination drive could decouple India's economy from another pandemic-induced shock.
The survey also said that a large proportion of the participating companies emphasised the problem in availing credit and called upon the banking community to further enhance lending at a reasonable rate.
"The companies highlighted that the entire process for approval of loans has become extremely time consuming which is severely dampening business prospects," it added.
The survey also called for targeted fiscal support- in the form of tax waiver and financial assistance- to MSME sectors that were previously kept out of the stimulus package but were deeply impacted by it including travel, tourism, hotels and hospitality, and civil aviation.
In addition, it said, the government must provide employment-based incentives to employers to avert any job losses and this could include temporary fiscal support towards payments of salary for employees in the MSME (Micro, Small & Medium Enterprises) sector and/ or exempt employers' contribution to PF and ESI for the current fiscal year.
The survey was conducted during April-May and gauges the expectations of the respondents for April to September.