India Inc CEOs think the first half of the financial year 2022-23 "looks robust" and the Indian economy, despite monetary policy tightening and high inflation, will grow at 7%-8% in H1 FY23. This was revealed in the results of a recent poll conducted by CII at its Second National Council Meeting for FY23 in Delhi, which saw the participation of 136 CEOs from across the country.
Around 57% of the CEOs, who took part in the survey, say the country's economy will grow by 7-8%, while 34% anticipate below 7% expansion. "While expectations of monetary tightening are pervasive, given the sharp increase in inflation and heightened inflation expectations, the overall outlook for H1 FY23 looks robust," the CII CEOs survey reveals.
On companies' performance, 44% of the CEOs reveal an "upbeat sentiment", with their company’s revenue growth to be in the range of 10%-20% during the first half of FY23. Around 32% anticipate over a 20% jump in revenue. On profit, 45% say their company’s profit growth is likely to increase by over 10%, while 40% think profit growth may stand slightly lower, up to 10%, during H1 FY23.
“The CII CEOS Poll 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,” says Chandrajit Banerjee, director-general, CII.
On the buoyant profit outlook, the CII survey reveals though 46% of the CEOs say rising input prices would affect their profits between 5%-10% during H1 FY23, followed by another 28% who expect a 10%-20% hit to their profit, only 43% indicate their companies increased output prices to accommodate the input price rise in recent months. Nearly 57% absorbed the input price rise and of these, about 30% even improved efficiency to cut costs of their output. On jobs, most CEOs think there are improved job creation prospects in their companies during H1 FY23 as compared to the same period last year.
Around 48% of CEOs think inflation will be in the range of 7%-8% during H1 FY23. Due to high input prices and inflation, nearly 64% say the states must reduce VAT on fuel after the cut in excise duty by the Centre in May. On May 21, the Centre cut excise duty on petrol and diesel and also announced ₹200 subsidy on LPG gas cylinders to curb rising inflation.
On the demand front, 49%, about half of the CEOs, think the rural demand would be better in H1 FY23 than in the corresponding period last year.
A large share of the CEOs expects further depreciation in the rupee, at over ₹80 per U.S. dollar during H1 FY23. Around 55% of CEOs say it would, however, benefit their exports in H1 FY23 versus last year’s levels.
On imports, about 50% say there will be a "mild to moderate" disruption in the supply of inputs during H1 FY23 as compared to the first half of the last year. The current geo-political tensions, lockdown in China and recent Covid disruptions have forced around 30% of companies surveyed in the poll to face "supply-chain" issues. Around 25% CEOs, however, say there are only minor disruptions as they have diversified procurement away from China. Also, 23% see opportunities in terms of enhanced exports or new export opportunities.