CEOs indicate business sentiment revival; economic recovery on anvil: CII

The CEOs of top 115 companies who met at CII's National Council earlier this week indicated revival of business sentiment and a gradual rise in expected corporate performance in a poll, raising hopes that a steady recovery of India's economy is on the anvil.

The CEOs, who took the poll, included representatives from across sectors like metals and mining, manufacturing, auto, pharma, health, energy, infrastructure, construction and leading services sector including ITES, health hospitality tourism and e-commerce,the Confederation of Indian Industry (CII) said on Sunday.

"A steady recovery of the Indian economy is on the anvil as corporate India restarts business and economic activity with lockdowns being increasingly relaxed in many parts of the country," the chamber said.

India Inc is now estimating a capacity utilisation of more than 50 per cent in the second half of this financial year, it added.

However, according to CII, governments both at the Centre and states would need to focus on livelihoods in addition to lives, and hence efforts need to be made to stall the practice of sudden and ad-hoc lockdowns announced by states as well as districts.

The lockdowns not only further disrupt the revival of economic activities but also do not yield the desired results on lives either.

"It is important to allow a complete opening up of the economy for demand to pick up which in turn will propel capacity utilisation," CII said, adding that the uptick in demand is expected to gain momentum in the coming weeks with the festive season round the corner.

The unlocking of most economic activities along with the reform and revival measures announced by the Centre and RBI have contributed to the gradual improvement in business sentiments in the second half of the current financial year, the chamber said.

"While in most cases, the performance revenue or capacity utilisation is estimated to be lower than the comparative figures in 2019-20, a large percentage of the CEOs polled have shown confidence in the days ahead indicating that the worst may be behind," CII said.

On consumer demand, 32 per cent of the CEOs are hoping for better prospects, while another 27 per cent of them expect no change when compared to the second half of last year, CII said.

However, only 31 per cent of the CEOs expect their revenue growth to be in positive territory in the second half of the current financial year as compared to last year.

About 40 per cent of CEOs expect better prospects on exports, while 24 per cent of them expect no change in the prospects during the second half of the current year as compared to the same period last year.

Apart from the agri-sector, which has been in positive territory, there are now clear indications of a smart recovery in some sectors like automobile, FMCG, consumer durables and construction equipment, CII said.

According to the chamber, the FMCG (fast-moving consumer goods) sector has been sequentially improving with each month, looking better than the previous month and demand in semi-urban and small towns is estimated to be back at pre-COVID levels, except in urban areas like Mumbai, Pune, Chennai, among others, where it is still picking up.

A similar story is playing out in the consumer durables sector where demand is expected to grow by 20 per cent by Q3, it said.

The consumer durables sector is witnessing strong demand, with double-digit growth in August. Washing machines, refrigerators, TVs, especially large TVs, kitchen appliances, lighting, among others, are all doing well.

However, supply side constraints may create challenges in meeting this demand if there are restrictions imposed on movement of goods and services, CII said, adding that the automotive sector is also seeing demand pick up.

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