India Inc expects 2022 to be a growth story: Business Standard CEO poll

India Inc to hire more and increase capacity in the new year to meet rising demand

Most chief executive officers (CEOs) of top Indian companies expect the economy to make a sharp turnaround in the new year even as they plan to increase capacity and step up hiring. 

A survey of 40 CEOs carried out in December shows that companies are expecting the economy to bounce back during the year. As many as 90 per cent of the CEOs polled expect consumer spending, especially in rural areas, to shoot up in 2022 after a dismal 2021, when the sales of cars and two-wheelers declined.

Expressing their optimism about the Indian economy, 53 per cent of the CEOs said that it would grow by more than 8.5 per cent, while 30 per cent felt that it would not grow to that level. The rest were non-committal. 

“While everybody talks about 8.5 and 9.5 per cent GDP growth, in my view, it may not grow beyond 7-7.5 per cent by real measurement criteria,” said AM Naik, executive chairman of construction major, L&T.  

“The GDP may show 8 per cent growth because the base went down due to Covid-19. But the real growth is only 3.5 per cent or 4 per cent. When the level of the GDP prevailing before Covid grows, then it will be real growth,” Naik said.

In early December, the Reserve Bank of India (RBI) painted a bullish picture of the Indian economy, stating that after one of the deepest contractions in the first quarter of 2020-21, it has recovered to a position in which the country’s GDP has expanded by 13.7 per cent in the first half of 2021-22. 

Pre-pandemic levels have been crossed in several sectors of the economy, and all components of GDP registered year-on-year growth, with exports and imports strongly surpassing their pre-COVID levels, the RBI added.

Most of the CEOs shared that positive outlook for the economy, and 83 per cent of them said that they planned to hire more in the new year. As many as  88 per cent also said that they did not lay off any staff in 2021. Though the workforce demand hasn’t touched the pre-pandemic mark as yet, the continuous quarter-on-quarter increase in 2021 shows that companies will continue to hire more in the new year, especially in retail sales and infotech-related jobs, the CEOs said. 

As the pandemic recedes, work-from-home may no longer be necessary. In fact, 88 per cent of the CEOs expect employees to come back to offices in the new year, though the Omicron variant of the coronavirus may delay the plans by a few weeks.

A majority of the CEOs polled — 73 per cent — said they were happy with the steps taken by the Indian government to fight the pandemic. Also, 65 per cent said they expect the RBI to reduce the interest rates further in 2022 to help companies bring down their finance cost and invest in new facilities.

Most CEOs were also upbeat about rural India, with 65 per cent saying that rural areas would be the growth trigger in the new year — a prognosis that could spell hope for two-wheeler and tractor manufacturers. Several CEOs from the automobile sector suggested that to revive demand, India ought to focus on trade agreements to reduce barriers for exports and imports and review the GST tax regimes on automobiles. 

However, there were some major concerns, too, and 65 per cent of the CEOs said that rising costs would be the biggest headache for their companies.
 

As for revenues and profits, 18 per cent of the CEOs said that these had already crossed pre-pandemic levels. Another 25 per cent expect to reach the pre-pandemic level only by the quarter ending December 2022. The rest expect their output and profits to reach pre-pandemic levels in the first three quarters of 2022.

Interestingly, despite a 20 per cent rise in the BSE Sensex in the calendar year, 2021, 80 per cent of the CEOs felt that the Sensex will remain below 75,000 points by next year end, while 15 per cent were optimistic that it will cross the 75,000-mark. The CEOs were equally divided in the opinion that the rupee would cross Rs 77 against the dollar by the end of next year.

When asked about the biggest lessons of the pandemic, the CEOs said that empathy and wellness of the employees were all important now, and that they would embrace the latest technology in all their future business decisions.

“Where 2021 was all about resilience, the year 2022 will be about survival of the fittest with new dynamics. The new year will act as a litmus test for sustainable economic growth to maintain upward GDP growth inclusive of job creation,” said Niranjan Hiranandani, managing director of Hiranandani Group, a real estate firm.

The CEOs said, moreover, that the Union Budget, which is expected to be announced on February 1, could help turn the tide. Post Covid, developing world class health infrastructure is key to providing good medical facilities, they said.  Besides, higher allocations and stimulus for rural India to boost consumption in the hinterland are necessary for the recovery, CEOs said.

A majority of the CEOs also said that owing to the risks associated with climate change, they were taking steps to become a net zero emission organisation in the next few years. 

(Dev Chatterjee with Shally Seth Mohile, Ishita Ayan Dutt, Sharleen Dsouza, Aditi Divekar, Shine Jacob, Aneesh Phadnis, Sohini Das, Chirag Madia, Shivani Shinde, Peerzada Abrar, Abhijeet Lele)