Improvement in economic buoyancy, ease of doing business, post demonetisation: Deloitte survey

With India's economy moving towards greater heights in terms of economic prospects post demonetisation and amongst global uncertainties, the economy remains buoyant and is fast recovering from regulatory disruptions, an annual survey by Deloitte revealed.

According to the survey, titled CFO Survey 2017, given macro-economic trends that point to a possible global growth revival, there will be opportunities to increase exports and investment, which have been a concern for the past few quarters.

Deloitte India CFO Survey 2017 highlights the stance of CFOs in India on various facets of the Indian economy, investment climate, industry expectations and CFOs' role and readiness. It brings together a multidisciplinary team of Deloitte leaders and subject matter specialists to help CFOs stay ahead in the face of growing challenges and demands.

The survey represents the viewpoint of over 200 chief financial officers (CFOs) in India. The respondents include listed and unlisted companies, from both private sector and PSUs; Indian companies and MNCs headquartered in India as well as overseas.

Additionally, the survey noted that the implementation of the Goods and Services Tax (GST) is a welcome policy for development across all industries.

These regulatory changes along with the upcoming technology up-gradation have led the companies to withstand critical transformations in order to stay ahead in the race of unseen competitive threats.

In comparison to last year's CFO Survey results, the CFOs' near-term, medium-term and long-term priorities are almost same in terms of profitable growth. Business partnering and compliance to changing regulatory environment has witnessed a growth of five and seven percentage points respectively, for the CFOs near-term priority versus last year.

With the Indian economy adopting the GST, companies have shifted their focus to supply chain modification and inventory cost management, which might disrupt their working cycles. This change could fuel inflation in the economy as the tax burden has risen. However, it is believed that better flow of input credit will negate the impact of higher rates on services.

In comparison to last year's survey, a positive expectancy has been observed among business leaders with respect to India's medium to long term economic outlook. 30 and 56 percent of the CFO's are now 'very optimistic' about economic prospects over the next three and five years, respectively, thus resulting in a substantial increase in business confidence and the willingness to take risks, which bodes well for capital investment growth.

51 percent of the CFOs said there is high credit availability at cheaper cost versus 28 percent of the CFOs who reported high credit availability at cheaper cost in the last year survey.

Technology up-gradation (23 percent) and analytics solutions (17 percent) continue to dominate the CFOs agenda due to the increasing importance of technology and analytics for decision making and strategy of the organisation.

The key focus area for 44 percent of the CFOs is current geographies in lieu of entering new markets; of which more than 50 percent CFOs are from energy, manufacturing, technology, media and telecommunication sectors.

In terms of external risks, 19 percent of the CFOs believe regulatory impediments and 14 percent of the CFOs believe uncertainty in tax environment are the two major external risks faced by companies currently as a result of changing regulations and policies.

On the other hand, 15 percent CFOs shared their concern for execution against the plan; whereas 15 percent CFOs are concerned about cost and productivity improvements with respect to internal risks.

Compliance to the changing regulatory environment transpires as the top most priority for the CFOs. While 69 percent CFOs responded that is a near-term priority, 61 percent CFOs stated that internal control and streamlining is their near-term priority.