India Inc eyes growth in 2024, plans to boost hiring, investments

Higher corporate earnings, consumer spending, FDI to drive up markets

Chief executives of Indian companies are planning to hire and invest more in the New Year as they expect the economy to post healthy growth in the election year of 2024. General elections are expected to be held inApril and May. 

A poll of nearly two dozen chief executive officers (CEOs) shows that an overwhelming majority of business leaders expect a revival in rural consumer spending and a rise in foreign direct investment (FDI) inflows as global companies increase their presence in the country.

According to a dipstick survey conducted in De­ce­mber across India by Business Standard, the biggest worry among business leaders is inflation and interest rates, followed by attracting/retaining talent, and a fractured mandate in the general elections. 

Almost 91 per cent of the respondents said they would invest more in the New Year, and an equal number of the CEOs rated the Narendra Modi government’s performance in the past nine and a half years as “excellent”.

“From a business perspective, the Modi government’s performance has been excellent in improving the ease of doing business in the country.  Overall, India’s perception at a global level has risen, while the free trade agreements with multiple countries have also boosted the country's exports,” said a CEO of a technology firm, requesting not to be quoted.

The measures taken by the government and the Reserve Bank of India (RBI) towards controlling inflation were appreciated by the respondents, with 100 per cent of CEOs saying they both did a good job to curb rising prices. A majority of the respondents (54.5 per cent) do not expect the Opposition-led bloc (INDIA) to dent the prospects of the ruling government in the new year.

“One thing the government could have done better is creating more employment opportunities. India’s growing employable community needs to be channelised in an appropriate manner,” a CEO of a large south-based firm said.

In terms of employment, 72.7 per cent of the CEOs said they plan to hire more in 2024, though 86.4 per cent of them said the annual hikes for their employees will be less than 20 per cent. Almost 96 per cent of the respondents said they expect FDI to grow in the new year, as media reports suggest that electric vehicle majors like Tesla of the United States and VinFast Auto of Vietnam plan to set up shop in the country. Their confidence runs high when it comes to growth, despite 2024 being a general election year and given the geopolitical uncertainties. Almost 64 per cent of the leaders expect their company’s earnings to grow by over 20 per cent in the new year.

On the financial markets, over 68 per cent of CEOs expect the rupee to stabilise between 83 and 85 against the US dollar. “As far as the rupee goes, for 2024, we expect it to trade in the range of 81 and 85 to a dollar. On the domestic front, momentum will be driven by the general election and flows that will be attracted in the equity and debt segments,” said the CEO of a financial services firm in Mumbai.

“Now that India has positioned itself in the JP Morgan bond index, it is likely to attract flows to the tune of over $25 billion post June 2024. On the global front, the US Fed is almost near its peak for the interest rate tightening cycle, and dot plot suggests that the US central bank could cut rates thrice in 2024. Active intervention by the RBI could keep the volatility in check for the rupee,” the CEO said. 

The stock markets, which saw a massive boom in 2023, will continue to see a good year, the CEOs predicted. Over 86 per cent of them expect the benchmark S&P BSE Sensex to remain far higher than 68,000 levels, which were seen in early December when this survey was initiated.

In December alone, the Sensex has rallied 7.8 per cent, from 66,988.44 (November 30) to 72,240.26 on Friday, the last trading day of 2023. “Indian markets would continue to see positive momentum in 2024 on the back of a favourable mix of sound macros, healthy corporate earnings, moderating inflation, declining commodity prices, expectations of rate cuts globally, the likelihood of political stability, strong FII (foreign institutional investor) buying, high SIP (systematic investment plan) flows, and notable retail participation,” said the CEO of a financial services firm.

The CEOs were also ready with the wish list, with most of the respondents asking the government to keep the momentum in creating world-class infrastructure. “The post-election Budget should reiterate the theme of infrastructure capex, accommodating it within the medium-term fiscal consolidation path. One would also look for the government to address concerns over the excess capacity in China finding its way to the Indian market,” said a CEO of a large steel firm.

In the previous Budget, the government announced spending of a record Rs 10 trillion or 3.3 per cent of the GDP in infrastructure spending.

Among other things, CEOs want the government to hasten the pace of reforms and fast-track the disinvestments and revival in the private capex cycle. Land acquisition-related delays need to be addressed, they said.

Low demand among rural areas for consumer products was a big concern for the respondents, though 63.6 per cent of the CEOs expect the demand to revive in the coming year.