Indian businesses are optimistic about the economy and believe that the measures taken by the government as well the RBI brought growth back on track, with the Budget expected to add to the momentum, a survey has found.
More than 75 percent of the business leaders were positive about the country’s growth and expansion, up from 68 percent last year, despite the third Covid wave, the survey by Deloitte Touche Tohmatsu India LLP showed.
About 91 percent of the respondents said the initiatives under Aatmanirbhar Bharat and policies by the Reserve Bank of India (RBI) helped bring the economy “back-on-track”, with expectations that the Union Budget 2022 would “build this momentum”. These responses are up from 58 percent that the survey recorded in 2021.
“The economy has witnessed a steady recovery during FY’22. The Indian economy will continue to witness the growth momentum if the government is able to sustain the efforts on implementation of reforms such as asset monetisation for the infrastructure growth, and PLI schemes,” said Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India LLP
Here is what business leaders expect from the Union Budget 2022:
1 A majority—55 percent—want investment in infrastructure. Business leaders believe providing extra tax incentives to long-term investors for infra investment can help promote growth.
2 About 45 percent of the respondents believe the Budget should have incentives for increasing research and development (R&D) spend which would benefit sectors such as automobiles, capital goods, life sciences, technology and telecommunications.
3 On group taxation, the survey found that the overall industry perception seems to have “significantly changed”, and 70 percent of the respondents now want group taxation to be implemented within the next year.
4 More than half the respondents feel that lowering indirect taxes for businesses and speeding up the deduction of expenses will assist growth in priority sectors.
5 To boost demand, 48 percent respondents want the budget to reduce taxes. They feel that adding employment and reducing personal tax may provide industries the much-needed push.
6 To enhance export competitiveness, most believe imposing competitive import tariffs and reducing administrative inefficiencies can make a big difference.
7 For MSMEs, close to 35 percent of the respondents want the Budget to extend higher credit support to the sector, besides accelerating the government’s divestment and asset monetisation programme.
Deloitte’s expectations from the Budget:
– Focus on infrastructure and asset monetisation
– Increase demand and employment by stimulating MSMEs
– Support to the disproportionately affected sectors
– Boost exports
– Focus on social sectors (education and health)
Outlook for India
Sector-wise, a high majority of the industry leaders were positive about India’s growth in FY’22, with banking, financial services and insurance and chemicals industries being the most optimistic.
Overall, 78 percent respondents were positive in 2022, compared to 68 percent in 2021; 18 percent were neutral against 25 percent last year and 4 percent were negative, down from 7 percent.
In terms of outlook, around 56 percent believe the production-linked incentive (PLI) scheme was a game-changer, especially for telecom and technology, followed by the electronics, life sciences and healthcare sectors.
Over 60 percent of the business leaders were of the opinion that the PLI scheme would attract investors, increase manufacturing and exports and boost the growth of different sectors as well as the economy.
On ease of doing business, about 59 percent of the respondents said India provided a favourable atmosphere and that enhancing digitalisation, simplifying taxes and improving land and labour laws would make it better.
Half of the respondents agreed that large-scale digital innovations driven at unprecedented speed due to the pandemic had been beneficial.
“Most business leaders anticipate that increasing start-up activity, coupled with the government's stimulus packages and policies, will push the ease of doing business in India, resulting in a quick economic revival,” Kumar added.
The Budget 2022 expectation survey aims to analyse the industry’s hopes from the standpoint of economic growth, the ease of doing business, and self-reliance. The survey was conducted online with 163 respondents across 10 industries who answered 20 questions.
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