A majority of CEOs want the government to simplify the country's tax regime to boost growth and consumption, a Moneycontrol-Deloitte survey of 45 Chief Executive Officers revealed.
The survey was conducted between January 10 and 22 across the financial services, consumer goods, technology, and energy sectors.
Ease of doing business
A staggering 91.1 percent said simpler tax regimes and compliances would enhance India's ease of doing business, making the country a more attractive destination for investments.
Efforts to streamline the regime are already underway, with the Centre working towards replacing the Income Tax (I-T) Act of 1961 with a more modern and simplified framework.
The proposed overhaul envisages an extensive review of the current Act, which is all of 23 chapters. A dedicated I-T review committee, comprising 23 sub-committees and working groups, is scrutinising each chapter to identify areas for improvement.
About 60 percent said digitisation efforts need to be enhanced and that the government must implement a single online window for clearances.
Read here to know more about measures suggested by CEOs to enhance the ease of doing business.
Tax relief and job creation for consumption boost
On boosting consumption, a sizeable 86.7 percent of the CEOs called for increasing disposable incomes through tax relief and rationalisation of the goods and services tax (GST).
Several media reports have indicated that the government may grant relief on income taxes in the upcoming union budget, which will be presented on February 1.
There are expectations that the central government may sweeten the deal for those opting for the new tax regime, including exempting annual income of up to Rs 10 lakh from taxation.
Besides, 57.8 percent believed consumption can be spurred by continued investment in infrastructure, which will create opportunities for semi-skilled workers in tier 2 and 3 cities.
Simplify taxes to boost growth
Asked about the reforms the government should prioritise to boost the country's GDP, 86.7 percent of the CEOs surveyed put their money on simplifying the tax regime.
Further, 55.6 percent of the respondents expect trade and investment reforms to spur growth. And 46.7 percent of the CEOs believe that reforms around digitising governance to enhance efficiency, transparency, and inclusion would be the best bet to boost growth. Click here to read the full story on this.
Data released earlier this month by the statistics ministry showed that India's real GDP growth slowed down to 6.4 percent in Q2 of FY25 from 8.2 percent in the previous quarter.
Tax changes
The chorus to reduce income tax rates in budget 2025 is growing louder, with over 44 percent of the CEO's polled batting for this in both the old and new tax regimes.
Specifically, nearly 29 percent of the respondents said they would like to see Finance Minister Nirmala Sitharaman reduce rates in the new, minimal-exemptions regime.
The 2024 union budget presented last July had introduced a raft of changes to income tax slabs, rates, and standard deductions under the new tax regime, besides revamping the capital gains tax structure.
With regard to corporate taxes, India Inc is not expecting any significant changes in the current regime, with 62 percent of those polled voting for a status quo.
India's growth story
A majority of business leaders are optimistic about the Indian economy, with over 55 percent of CEOs believing that the country’s GDP will grow in the range of 6.5-7 percent in the next financial year, per the MC-Deloitte survey of CEOs.
However, a small percentage of CEOs were extremely optimistic, expecting GDP growth to be above 7 percent in FY26. They believe that achieving over 7 percent growth is possible if Indian businesses capitalise on the ‘China-plus-one’ strategy.
42 percent of the Chief Executives see the current economic slowdown in India as temporary, with many expecting a recovery in the next financial year, the survey revealed.
The optimism reflects confidence in India’s economic strength, even as it grapples with short-term hurdles.
India's GDP growth slumped to a seven-quarter low of 5.4 in the second quarter of the current financial year. This raised concerns, though Sitharaman reassured parliament on December 17 that the downturn was a "temporary blip."
Transformational reforms
Responding to a question on what should be on top of the government's reform agenda, 46.7 percent of respondents called for continued focus on capital expenditure as well as tax simplification. Read here.
About 28.9 percent anticipate fresh reforms encompassing tax code restructuring, private investment, and green financing mechanisms.
For the past few years, the Centre has been focussing on infrastructure spending to boost growth. However, capital expenditure for the first eight months of FY25 contracted more than 12 percent to Rs 5.1 lakh crore, raising concerns about meeting the record budgeted target of Rs 11.11 lakh crore.
RBI must cut rates
A substantial number of CEOs expects the Reserve Bank of India (RBI) to deliver a 25-50 basis point (bps) cut in the benchmark repo rate in the next six months.
While 25 percent of the Chief Executives expect a 25-50 bps cut in the next six months, 22.7 percent see the RBI maintaining status quo. Read here for the full story.
On the the central bank’s ability to contain inflation to the target of 4 percent, 36.5 percent the business leaders are only moderately confident, according to the survey.
On December 6, the RBI revised its inflation forecast for FY25 to 4.8 percent, up from 4.5 percent projected last October.
Per the latest data, retail inflation remained above the RBI's target even as it declined to a four-month low of 5.22 percent in December, from 5.48 percent the previous month.
Longterm semiconductor policy
Almost 66 percent of the CEOs emphasised the need for robust policies that support both advanced and emerging semiconductor technologies as a top priority, to secure India's position in the global chip ecosystem.
Over 61 percent of the Chiefs expressed the need to promote R&D among domestic companies, while supporting global R&D services to build a strong talent pipeline. Read here.
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