Top CEOs seek large fiscal stimulus or tax sops to jumpstart economy – The Economic Times

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SynopsisEighty-two per cent of the 59 top corner-room occupants who voted in the ET poll see 5-10% GDP growth in FY22 while 56% said demand for their goods or services had been impacted adversely by pandemic’s second wave.

India’s top CEOs called for a large fiscal stimulus or tax incentives from the government, expressing concern about a modest economic recovery in the next two quarters though many see a swift recovery in their own sectors, a survey by ET showed.

Eighty-two per cent of the 59 top corner-room occupants who voted in the ET poll see 5-10% GDP growth in FY22 while 56% said demand for their goods or services had been impacted adversely by the pandemic’s second wave. Just over a third of these CEOs, spanning nearly all sectors, see employees fully vaccinated and returning to the office by September. More than three-fourths said they will help employees get jabs.

“I personally expect the economy to bounce back as the effects of the second wave continue to subside. The Indian economy in my view will recover briskly and mirror its performance from last September,” said Keki Mistry, CEO of HDFC.

Cautiously optimistic
Mistry flagged a possible third wave as a risk. “It will take time for confidence to be boosted to pre-pandemic levels,” said Axis Bank CEO Amitabh Chaudhry, adding that the economic recovery is “tied to the pace at which we get jabs for everyone”.

India’s economy is likely to report strong growth in the June quarter because of the statistical effect of 24.4% contraction last year, but sentiment has soured following the severe second wave of the pandemic.


Most independent experts have pared growth estimates for FY22 to around 9% from nearly 14% before the second wave started. Nearly half the CEOs polled see 0-10% revenue growth in the first quarter. For the full fiscal, the projections are better with 68% seeing over 10% revenue increase.

Many CEOs are still wary of a third wave and are looking at rapid vaccination to cut that risk. Nearly two-thirds of the CEOs polled do not see a full return to the office this year or will watch the situation for some more time.

“I am optimistic of a good bounce-back provided there’s no major impact of a potential next wave of the pandemic,” said EY India CEO Rajiv Memani.

Of the CEOs polled, 59% sought strong fiscal expansion to boost the economy while 20% wanted a cut in the goods and services tax (GST) rate to spur demand. Less than 10% wanted incentives for stressed sectors as the major form of government support.

Announcing large infrastructure projects and giving incentives to sectors such as construction, manufacturing, automobiles, and services can help restore growth, said Navnath Vhatte, CEO, Vedanta ESL Steel.

Across the board, CEOs emphasised the need for rapid vaccination to clinch economic recovery and contain any third Covid wave. “The faster pace of vaccination drives will hopefully help mitigate potential mutants of the virus,” said Mistry.

India has vaccinated nearly 42 million people over the last six days, marking a significant acceleration in the pace of inoculation since the drive began in January.

Not too gloomy
A significant 39% see the economy bouncing back sharply over the next two quarters while 44% say demand for their products or services has either not been impacted or has even grown during the pandemic. About 44% of CEOs see a sharp revival in their sector or industry over the next two quarters.

Over a quarter see more than 20% revenue growth in the first quarter of FY22, the worst hit by the pandemic’s second wave, rising to 38% for the full year.

“Industry is buoyant with accelerated vaccination drive, the accommodative stance of RBI to control inflation and keep interest rates moderate, fuelling business continuity,” said Niranjan Hiranandani, national president of the National Real Estate Development Council (Naredco), a real estate lobby group.

Chaudhry of Axis Bank expects the festive season that starts in about two months to spur demand.

The sharp pick-up in vaccination is also expected to lift sentiment

“With the steady decline in the positivity rate and everyday growing vaccination coverage, we see that willingness to travel is strengthening once again,” said Ritesh Agarwal, founder, Oyo Hotels and Homes, adding that he does not see the economy impacted this year as badly as in the first wave.

Despite the economic stress, 69% said they do not need to raise capital this year. The rise in commodity prices also doesn’t worry many of those polled, with 44% saying it wouldn’t have much of an impact on input costs while another 22% said it was modest and the increase will be absorbed.

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