The GST was a big-ticket reform rolled out by the Narendra Modi government soon after the surprise announcement to demonetise Rs 500 and Rs 1,000 notes in November 2016, leading to disruption in sales and profits of Indian firms and even job losses in certain segments of business. Half the CEOs polled said their sales fell due to the note ban.
With the negative impact of demonetisation waning and the implementation of the GST, 80 per cent of the CEOs surveyed said they were planning to hire more people in 2018. Eighty per cent said they would invest more in 2018 and 90 per cent of them expect higher growth. Fifty-five per cent of the CEOs surveyed expect interest rates to come down in 2018. Fifty per cent said the economy would grow at over 7.5 per cent in 2018.
“What excites me about India is the optimism in the business environment, which is reflected in the enthusiasm that leading global leaders continue to express, the opportunities that the country’s youth have in disrupting existing business models or creating new ones, and a marketplace with an enormous appetite for consumption,” said Anant Goenka, managing director of tyre major Ceat.
Fifty-five per cent of the respondents said the rupee would become stronger in 2018 versus the dollar. The rupee closed at 63.9 a dollar on Friday. “Whether the Indian currency gets stronger or not will depend on whether interest rates go up in the US. One of the biggest risks next year would be the rupee going up,” said Venu Srinivasan, chairman, TVS Group.
In what is good news
for the tax department, 65 per cent of the CEOs said the harassment from the tax department did not increase in 2017 though it was a big concern last year when a similar survey was conducted by this newspaper.
CEOs said the next big event to watch in 2018 would be the last Budget of the Modi government before the 2019 elections.
CEOs said Finance Minister Arun Jaitley should make good his promise in 2014 that corporate taxes would come down to the levels of Association of Southeast Asian Nations, or Asean.
“There should be a clear road map for corporate tax rate cuts over the next two-three years and, of course, upward revision of allowances and deductions for salaried individuals to align it with ground realities and current inflation,” said Shyamal Mukherjee, chairman, PwC India.
The year was also good for the wealth of CEOs in calendar 2017, with the NSE Nifty giving 28.6 per cent returns and the BSE Sensex gaining 27.9 per cent during the year.
Compiled by BS Research Bureau. Source: BS CEO Survey
Sixty per cent of the CEOs surveyed said the Sensex would breach the 35,000-barrier in 2018, while 30 per cent of the CEOs said it would not, mainly due to series of elections in 2018, culminating in the General Elections in mid-2019. Besides, 2017 was a spectacular year for the Indian initial public offering market, with equity issuances across categories increasing 2.5 times over the previous year.
“The economic consolidation is a solid message that should come from the Budget, including reform of the public sector banking, which has come under severe scrutiny globally,” said Srinivasan.
(Dev Chatterjee, Ajay Modi, Romita Majumdar, T E Narasimhan, Aneesh Phadnis, Viveat Susan Pinto, Amritha Pillay, Rajesh Bhayani, Avishek Rakshit, Raghavendra Kamath, and Shreya Jai contributed to this story)