The business activity net balance fell sharply to -30% of companies in June, from +26% in February. The net balance figure is calculated by deducting the percentage number of respondents expecting a deterioration/decrease in a variable over the next twelve months from those expecting an improvement/increase.

With that, Indian companies were the most pessimistic of the 12 countries for which comparable data is available. Also, the outlook for profits in India was the worst of the countries covered by this survey.

Consequently, companies continue to look to scale back on workforce numbers. “As was the case with business activity, the outlook for staffing levels in India was the lowest of the 12 countries covered. Both the manufacturing and service sectors recorded pessimism in terms of employment, with service providers registering a greater degree of negativity,” said the report.

Commenting on the survey, Andrew Harker, economics director at IHS Markit, said, the outlook for India was the worst globally, indicating that it is still some way from seeing the peak impact on economic activity of COVID19.

In its mid-year outlook published on 10 July, research house Nomura had said it was negative on India among Asian peers when it comes to the pace of economic recovery.

“We expect COVID-19 to amplify the financial sector weakness, worsening nonperforming assets and slowing potential growth. A weaker pace of recovery in 2020 will mean more policy support is likely, both monetary (50bp cut) and fiscal,” the report said. One basis point is one hundredth of a percentage point.

India’s key rate – the repo rate at 4% – is at its historic low.