CEOs expect FY19 GDP to grow more than 7%: CII poll
11 June 2018: Investment in the country is likely to get a powerful boost with the market set to grow past the 7% mark in the current fiscal year, a CII poll of CEOs has indicated. A majority of the CEOs polled expect a pickup in capacity utilization in the industry due to increased demand, as well as the creation of more jobs.
The economy is in a sweet spot right now as the correction process regarding major reforms of the past few years is largely stabilized and industry is ready for a fresh phase of investment while capacity utilization builds up,” said CII president Rakesh Bharti Mittal said.
As much as Rs 50,000 crore of investments have recently been announced, noted by the CII. “Industry is looking forward to GDP growth rate picking up to close to 8% over the next couple of years. Fiscal prudence, able mac able macroeconomic management, and strong reforms process have set a sound foundation for growth,” he added. However, CEOs saw credit and capital availability, especially for the micro, small and medium enterprises sector, as a concern. Bank loans could remain sluggish for the next two-three years, and recapitalization of public sector banks is imperative. They also pointed to rising raw material and fuel costs as a key challenge.
The opinion poll, held during a CII meeting in Pune recently with more than 80 senior corporate leaders in presence, showed that 82% of the CEOs expect GDP growth to be higher than 7% for the year 2018-19, with 10% of them predicting it to be above 7.5%. As much as 82% of the respondents expect capacity utilization to increase in the coming year from the current 74%, while 92% expect a further increase in consumer demand during 2018-19 — thus implying a surge in investments going forward.
In fact, as per 60% of the CEOs polled, private investments are set to increase during the coming year. On job creation, 56% of the CEOs expect jobs to increase during 2018-19 while 18% believe those to remain current levels.
Industry leaders were of the view that the agriculture required more attention from the government.
“The agriculture sector requires investments, market reforms, land lease and contract farming options, and boost to productivity. Investment in agri value chains will also yield results for farmers. Other areas that need to be pursued include food processing, agri exports, and development of farmer producer organizations,” the CII said in a release.
They expect the trade deficit to increase as imports were likely to grow. Of the respondents, 55% believe exports growth will pick up in 2018-19 over the pace of 9.9% reported in 2017-18. Imports are expected to grow faster than previous year’s 21.2%, stated 63% of CEOs. Thus, 61% of the participants expected the trade deficit to widen. In manufacturing, overall opinion of CII members was that demand was healthy, although input costs were rising.