Industry leaders expect 6.5% GDP growth in 2023-24: Survey

The majority of industry leaders expect India’s gross domestic product (GDP) growth to be above 6.5 per cent in the financial year 2023-24 helped by strong domestic demands and focus on capital expenditure, as per a pre-budget industry survey conducted by Deloitte.

India Inc is optimistic about domestic growth despite the global economic slowdown. 62 per cent of the respondents who participated in the survey expect the GDP growth to be above 6.5 per cent, while the remaining 38 per cent see the growth slipping below 6.5 per cent.

Industry leaders involved in the chemicals, capital goods and energy sectors are among the most optimistic about India’s economic growth while food processing, textiles, life sciences & healthcare and automotive are among the least optimistic.

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In the chemicals sector, 72 per cent of the respondents expect the GDP growth to be more than 6.5 per cent. Among the other industry sectors, capital goods (70 per cent), energy (67 per cent), telecom and technology (65 per cent), and electronics manufacturing 65 per cent are among the most optimistic about the country’s growth.

The majority of the industry leaders feel that the government initiatives, such as Atmanirbhar Bharat, PLI, and favourable monetary policies by RBI (to moderate retail inflation and maintain significant forex), increased spending on infrastructure, and research and innovation will further the growth momentum.

The capital goods sector has performed well in recent quarters, and higher policy rates have helped banks improve margins. Geopolitical uncertainties have created opportunities for sectors, such as chemicals, electronics, and energy while digitisation has helped the technology sector.

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The buoyance is evident from their outlook for the economy, where a large share of respondents from these sectors has expressed confidence in growth to be high, Deloitte Touche Tohmatsu India noted in the report.

Critical to this growth will be the pace of capital expenditure, infrastructure development, and the need to boost infrastructure financing through private partnerships.

A majority, 60 per cent of respondents, suggested raising funds through Indian Government Bonds. This proportion has increased by 12 per cent from the previous year’s survey. 58 per cent of respondents suggested that public-private partnership (PPP) should be encouraged to meet the funding gap and address issues that deter private participation while bringing in innovative structures such as credit guarantee enhancement.

“Industry players are optimistic about the upcoming budget and expect a slew of measures for economic growth, with a strategic focus on infrastructure development, boosting exports, easing compliances, and leading the nation towards carbon neutrality,” Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India, noted in the report.

According to the survey, about 70 per cent of respondents commended the Production Linked Incentives (PLI) schemes for beneficial growth in their sectors. Further, 60 respondents advocated that extending these incentives for the coming years would facilitate and increase their production capacity. The expectation to extend the PLI scheme was the highest among respondents from the food processing, telecommunications and technology sectors.

As global uncertainties and an economic slowdown loom across geographies, tax-related changes are expected to boost industry growth and are the most sought-after measures from the upcoming Union Budget. An overwhelming majority of respondents see trade treaties as vehicles for increasing investment flows and providing an exchange of emerging technologies to strengthen their role in global value chains.