Mumbai: Top corporates in the country anticipate a faster economic recovery from the impact of the second wave of Covid-19.
A CII CEOs Poll of 119 corporate heads showed that about 59 per cent of the CEOs polled expect the recovery in sales to be better than in the first wave for their companies, while 46 per cent of them expressed a similar trend for their respective industry sectors.
The deadly second wave has not affected much of the economic activities as the lockdowns were largely designed to limit social gathering and this has helped limit the impact of the second wave on economic growth when compared to the first wave, said Chandrajit Banerjee, Director General, CII.
As vaccination holds the key to mitigating the impact of the second wave on economic activity and boosting consumer sentiment, Indian businesses are making concerted efforts to vaccinate their employees.
The poll results revealed that 55 per cent of employees of the polled firms have been vaccinated with at least the first dose of the vaccine.
Assessing the consumer demand for their sectors, 49 per cent of the CEOs expect it to be better in the first half of 2021-22 when compared to the same period in 2019-20. Similarly, 72 per cent of the CEOs expect private investments to be better in the first half of the current fiscal year when compared to the same period in 2019-20.
As many as 62 per cent of the corporate leaders confirmed that their firm was compelled to scale back operations during the second wave. Due to the scaling back of operations, the adverse impact on the profitability parameters of the firms is apparent too.
The poll results show 44 pc and 39 pc of the CEOs expect the dent on their revenue and net profit growth respectively to be over than 10 pc in the first half of the current fiscal as compared to the same period in 2019-20.
With India’s story remaining very strong, the economy will register a double-digit growth in the current fiscal and the disinvestment climate also looks better, said NITI Aayog Vice Chairman Rajiv Kumar.
He also asserted the country is prepared in a far better manner in case there is a Covid wave as states have also their own lessons from the previous two waves.
“We are now hopefully getting past our (Covid-19) pandemic… and the economic activities will be strengthened as we get into the second half of this (fiscal) year given what I have seen for example various indicators, including the mobility indicators,” Kumar said.
The Indian economy has been adversely impacted by the coronavirus pandemic and the recovery has been relatively sluggish in the wake of the second Covid wave.
Against this backdrop, the NITI Aayog Vice-Chairman exuded confidence that the economic recovery will be very strong and those agencies or organisations which have revised their GDP estimates downwards for this fiscal may have to revise them upwards again.
Because, I expect India’s GDP growth this (fiscal) year would be in double digits, he said.
The economy contracted by 7.3 per cent in the financial year ended March 31, 2021.
Among rating agencies, S&P Global Ratings has cut India’s growth forecast for the current fiscal to 9.5 per cent from 11 per cent earlier, while Fitch Ratings has slashed the projection to 10 per cent from 12.8 per cent estimated earlier. The downward revisions were mainly due to slowing recovery post second Covid wave. Indicating the possibility of a strong rebound, the Reserve Bank has pegged economic growth at 9.5 per cent in the current fiscal that ends on March 31, 2022.
Asked when private investments will pick up, Kumar said in some sectors like steel, cement and real estate, significant investment in capacity expansion is happening already. In the consumer durable sector, it might take longer because consumers might feel a little hesitant due to uncertainty on account of the pandemic, he said. Full-fledged private investment recovery, we should expect by the third quarter of this (fiscal) year.
Responding to a query on concerns over a possible third Covid wave, Kumar said I think the government is far better prepared now to face the third Covid wave, if at all it does come up… I feel the impact of the third wave on the economy will be much weaker than it was during the second wave and the beginning of the first wave. A good number of IPOs of startups are lined up, he said, adding the climate for disinvestment is looking better, giving room to be hopeful.