The outlook for the first half (H1) of the current fiscal is “robust”, regardless of the disruptions, with chief executive officers expecting improvement in job opportunities and revenues. This comes at a time of expectations of pervasive monetary tightening due to inflation, according to a survey.
About 78% of the CEOs polled expected job creation in their companies to be better, while 16% anticipated “no change” and 6% believed it to be worse than the comparable period of last financial year, a poll of 136 CEOs by the Confederation of Indian Industry (CII), said.
Nearly 44% said their firms’ revenue growth would be 10-20%, while another 32% foresaw a bigger jump of over 20%, compared with H1 of last year. This optimism was echoed on the profits front too, with 45% indicating their companies’ profit was likely to rise by over 10%, while 40% believed it may be “slightly” lower or up to 10%.
“The … results clearly demonstrate the resilience of Indian industry and the positive business performance outlook both on domestic as well as exports front despite challenges of high inflation leading to monetary tightening, rising input prices and uncertain global economic conditions,” CII director General Chandrajit Banerjee said.
In H1, the rising input prices would affect profits by 5-10% according to 46% of CEOs polled, while another 28% expect the hit to be bigger by about 10-20%. Only 43% indicated they had hiked output prices in the recent months to accommodate the rise in input costs, and 57% said they had absorbed the increase, of which 30% said they improved efficiency thereby reducing output costs.
Nearly half of them (48%) foresaw inflation to be in the range of 7-8% in H1 of FY23. In terms of high input prices and inflation, nearly two thirds (64%) were of the view that state governments must act to reduce value added tax on fuel after the cut in excise duty by the central government in May.
According to 57% of the CEOs, GDP growth is expected to be in the range of 7-8%, while only 34% expect it to be below 7%. On the demand front, about half of the CEOs (49%) felt rural demand would be better in H1 FY23.
A majority of the CEOs (55%) expected a further depreciation in rupee (rupee to be at 80 to a dollar) in H1, which would benefit exports, while on the imports front, 50% indicated mild-to-moderate disruption in supply of inputs.
On the impact of the recent ge-political developments and Covid-19 related lockdowns in China, 30% revealed they have faced moderate supply chain disruptions but have diversified away from China to some extent. On the positive side, 23% of the CEOs see opportunities during these disruptions in terms of enhanced exports or new export opportunities.