After Friday’s announcement that India’s GDP growth clocked 8.2% in the first quarter of the Financial Year 2018-19, the Confederation of Indian Industry (CII) CEOs conducted a snap poll, the results of which delivers a hammerblow to the critics of the Indian economy under Prime Minister Narendra Modi.
Roaring an extremely positive outlook for the future, CII’s top honchos pressed the button on 14 specific questions. Despite the granularity of the questions, the results of the poll projects a powerhouse Indian economy on the cards.
Conducted on Saturday as part of the CII’s National Council meeting in New Delhi, the snap poll was taken by as many as 71 leading CEOs from CII Member companies and the results express a robust and positive outlook on GDP growth, Corporate Revenues, Profits, Investments as well as employment.
While the full time critics continue their rants, the top bosses of industry have given the Indian economy a thumbs up.
The snap poll relied on a survey of a series of specific questions to top CEOs of the country on the Indian economy, industry specific expectations, employment and investment plans and the industry’s overall outlook on FDI and exports for the second half of the Financial Year.
Giving a big thumbs up to the Indian economy, the CII CEOs projected strong optimism on the growth front with 68.6% of them expecting GDP for fiscal 2018-2019 to be greater than 7.25%, which is significantly higher than the recorded GDP of 6.7% in FY 2017-2018. The poll result not only indicates a resounding voice of approval for the Modi government’s environment created for growth, but it also points to the fact that the jitters and short term uncertainty that came with the big bang reforms of GST and Demonetisation have now successfully tided.
Quelling fears of unemployment and the lack of job creation, two specific results of the poll delivered an unequivocal message that the top bosses of Industry in India were focussed on employment generation. While 70.5% of the participants said that they plan to increase hiring at their firms in the present year, 56.3% of the participants voiced that they expect employment to improve in the second half of the ongoing financial year.
The sketch for the overall expectation on the economy by the CII CEOs in the second half of the financial year sound off a fairly strong and positive sentiment. While 56.7% of the CEOs expected an improvement in consumer demand, almost 70% of them expected private investment to pick up. In a significant indication, 66.2% of the top CEOs taking this poll demonstrated that their expectation was that exports would improve in the second half of the year.
Coming in the context of the latest RBI report in August 2018 which spelt India’s FDI inflows at $37.3 billion in 2017-18 (an increase of 1 billion from the previous fiscal year), the sentiment vis-a-vis expectations of FDIs in the latter part of the year was laced with optimism. 48.5% of the participants of the poll expected an improvement in FDI in the second part of the year.
79.6% of the participants belonging to the Manufacturing Sector polled that they expect a 70-90% capacity utilization for their individual companies. This not only expresses a strong demand in the economy, but it also signals a big boost in terms of indicating a stable growth environment for manufacturing efficiency in the future.
The optimistic viewpoint of the CII CEOs from the sector comes on the back of the Manufacturing Sector growing at an impressive 13.5% in Quarter 1 of the Financial Year.
Calming fears on the investment front, the CII CEOs predicted a high level of investment activity. 44.1% of the participants expected substantial increase in investment, while 47.1% demonstrated a small increase in the same.
Apart from the laying out their plans for investments of their individual businesses, 80% of the participants expected an excess of 10% growth in their respective sectors, thereby painting an overall picture of a solid and durable macro-economic picture for India.
Expressing the sentiment of a muscular revenue growth and dropping the indication of industry expansion, 25.7% of the participants expected revenue growth to be more than 20%, while 47.1% of them forecasted revenue growth to be between 10-20%.
Reiterating a prospect of robustness in the Indian economy, one third of the participants expected profit growth of more than 15%, while 80 % of them pegged their profits to grow by more than 10 %.
On the question of additional finance for their business, 37.1% of the participants of the CII CEO poll said that for FY 2017-18 their companies relied majorly on banking credit.
The last question on the survey was in relation to the Regional Comprehensive Economic Partnership Agreement (RCEPA), which is potentially the world’s biggest free trade deal which is pegged to form the largest economic free trade bloc in the world. The pact which is in-motion visions to be between the 10 ASEAN countries and 6 of their Free Trade Partners (India, China, Australia, Japan, Korea and New Zealand).
Interestingly, despite the murmurs from quarters expressing fears that India would compromise its own interests by signing the RCEPA, over 51% of the CEOs who participated in the CII snap poll indicated that inking it would help India become part of the regional/ global value chain.
While a total of 71 CEOs took the poll, some of the participants included: Uday Kotak (MD-CEO, Kotak Mahindra Bank Limited), Vikram Kirloskar (Vice Chairman, Toyota Kirloskar Motors), Salil Singhal ( CMD, Pl Industries), Rakesh Bharti Mittal (Vice Chairman, Bharti Enterprises), Vishnu Mathur ( Director General, SIAM), Dr Pawan Goenka ( MD, Mahindra & Mahindra Ltd), R Dinesh ( Joint Managing Director, TVS Enterprises), Pratyush Kumar (President, Boeing India), Ajit Gulabchand (President of CFI and CMD of Hindustan Construction Company), Dr Janmejaya Sinha (Chairman - Asia Pacific, The Boston Consulting Group), Shyamal Mukherjee ( Chairman, PricewaterhouseCoopers India), Phil Shaw, Chief Executive (Lockheed Martin India), Vineet Mittal ( Chairman, Avaada Group), Sanjay Nayar (CEO, KKR India), Abhimanyu Munjal (Jt MD & CEO, Hero FinCorp), Piruz Khambatta (Chairman, Rasna Limited), Shibana Kamineni (Executive Vice Chairperson, Apollo Hospitals), Satish Reddy (Chairman, Dr Reddy's Labs), Atul Punj ( Chairman, Punj Lloyd), Arvind Thakur ( Vice Chairman and MD, NIIT Technologies), Debjani Ghosh (President, NASSCOM), Raghupatti Singhania (CMD, JK Tyre & Industries), MS Unnikrishnan (MD-CEO, Thermax), Bharat Puri (MD, Pidilite), Tulsi Tanti, (Chairman of Suzlon and Chairman of IWTMA) and TV Narendran (MD-CEO, Tata Steel).
Coming after a swathe of criticism, especially from the political Opposition, the results of the snap poll serve as an effective referendum not just on industry’s positive sentiment, but as equally industry’s stable forecast for the remainder of the financial year.
Politically, former Union Finance Minister and Senior Congressmen P Chidambaram while congratulating the Modi government on Friday for pulling off an 8.2% GDP growth in Q1, had predicted that “going forward the base effect will not be so favourable” and that the rate of “annual growth may be more or less like last year’s”.
In contradiction to that sentiment, 68.6% of the participants of the CII CEOs Snap Poll said that they were expecting a GDP growth in excess of 7.25% - which is higher than the 6.7% growth clocked in the previous financial year.
Contextually, the results of the snap poll will only enhance the country’s economic picture and present a sound environment for investment given the fact that it comes on the back of India being back in pole position vis-a-vis global growth trends with its Q1 performance putting up a strong show and demonstrating a healthy base.