New Delhi, Jun 1 (UNI) Business confidence in the country has sharply deteriorated as demand took a hit during the prevalent second wave of COVID-19 outbreak, according to industry grouping FICCI survey.

The Overall Business Confidence Index fell to 51.5 for the month of May after reporting a decadal high of 74.2 in the previous survey released in March, the Federation of Indian Chambers of Commerce and Industry said in a statement.

"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.

Around 70 per cent of participants in the survey reported weak demand conditions as a troubling factor as household income was being severely impacted and past savings were already spent during the first wave of infections last year, said the statement.

Rising raw material cost was also a concern among the participants in the survey, among whom 31 per cent saw a decline in better sales prospects compared to 66 per cent in the preceding survey and thereby decline in higher profits.

The outlook on employment was seen deteriorating with only 19 per cent respondents expressing optimism about hiring over the next two quarters compared to 35 per cent in the preceding survey while exports prospects were also seen subdued.

Respondents called on the government to offer another fiscal stimulus to boost demand along with liquidity support and credit enhancement to medium, small and micro enterprises, said the statement.

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