India seen growing 6.5–7% in FY27: ET-PwC survey

New Delhi: India is likely to clock real gross domestic product (GDP) growth of 6.5-7% in the coming fiscal, supported by the continuing growth momentum, though policymakers should remain mindful of the looming geopolitical risks and weak global demand, according to an ET-PwC survey.As per the survey, 78% of respondents expect India's growth to remain in the 6.5-7% band in FY27, reflecting optimism arising out of the current growth momentum, which the majority of CXOs described as strong to stable, while 21% expect it to be between 6% and 6.5%, and only 1% of the respondents foresee it in the 7-7.5% range.Official advance estimates project India's economy to grow 7.4% in FY26 compared with 6.5% in the last fiscal.127027656 More than half the corporate leaders saw geopolitical shocks as the biggest downside risk to FY27 growth outlook, followed by weak global demand, and almost a fifth pointed to trade uncertainties, according to the CXO study."CXOs are signalling strong momentum and expect around 7% real GDP growth next year. This optimism is reinforced by the India cut of PwC's 29th Annual Global CEO Survey, where 77% of India CEOs surveyed anticipate stronger domestic economic growth. Together, this presents a pivotal opportunity for the budget to deepen India's growth engines," said Sanjeev Krishan, chairperson, PwC in India.More than 200 senior corporate leaders were surveyed across health and pharma, technology, manufacturing, infrastructure, consumer goods & retail, and finance sectors. Around 60% of those surveyed described India's current growth momentum as "strong and broad-based" and 38% terming it "highly robust across the economy".Among industries, half of the respondents in consumer goods and retail, and 58% in healthcare & pharma found growth to be highly robust. However, 3% of the manufacturing industry interviewees and 2% of companies with revenue of Rs 10,000 crore and above found India's growth momentum to be "slowing visibly".Investment, demand visibilityCapital expenditure on infrastructure emerged as the single-most important budget lever, with half of the respondents favouring it. Almost a quarter of the respondents wanted the government to continue incentives for the manufacturing sector, while a similar proportion of CXOs pitched for a consumer stimulus in the budget."Prioritising infrastructure capex- our most dependable driver of demand, competitiveness and jobs - will be critical. At the same time, easing investment flows through faster dispute resolution and a more predictable policy environment can help unlock long-term capital," Krishan said, and added that strengthening manufacturing as a force multiplier by reducing cost pressures on MSMEs and improving logistics is essential.Nine out of 10 respondents cited either weak demand visibility or high borrowing costs as chief reasons for holding back private investment, with nearly three-fifths saying the cure lay in granting tax incentives."Equally, investing in AI, domestic compute capacity, and large-scale skilling will expand productivity and ensure technology becomes an enabler for inclusive, broad-based growth," he added.Weak demand visibility was the top reason holding back domestic private investment for 91% of those surveyed in the manufacturing sector, with high borrowing costs and regulatory and tax uncertainties being the other causes.Almost half the corporates forecast strong and broad-based consumer demand in FY26, with infrastructure being the most optimistic, while less than 5% of the BFSI, consumer, and infra respondents expect flat consumer demand.Fiscal consolidation, inflationThree-quarters of CXOs interviewed said there was strong-to-significant headroom for the government to achieve further fiscal consolidation. But a high proportion of infrastructure and BFSI CXOs saw "very little" headroom, according to a sectoral breakup of the study. More than half the respondents hoped the fiscal deficit will be bridged by higher tax buoyancy but the majority of infrastructure sector officials said cutting non-essential spending was the most effective tool to deal with fiscal deficit.Higher tax buoyancy has emerged as the top lever for fiscal deficit reduction, followed by subsidy rationalisation.The inflation outlook is mixed as 36% of the respondents expect it to rise, and 28% have a moderate position with concerns around food inflation. India's retail inflation was 1.33% in December-well within the RBI's 2-6% target band- while food inflation was -2.71%.

from Economic Times https://ift.tt/ecRu8Fz