A survey by Moneycontrol of over 50 CEOs and business heads across diverse industries in India has found that the majority expect inflation and interest rates to remain unchanged over the next six months. The findings provide important insight into how the country’s corporate sector is viewing the macroeconomic outlook in the run-up to the upcoming Union Budget for the fiscal year 2024-25.
The Moneycontrol CEO survey, conducted in early January ahead of the interim Budget, explored industry leaders’ expectations on key economic parameters that heavily impact their strategic planning and operational decisions. Overall, the responses indicate a relatively stable backdrop is anticipated by corporate honchos for inflation and borrowing costs in the first half of 2024.
On inflation, 62% of the 53 respondents said they foresee consumer prices holding steady. Only 23% pointed to a slowdown in inflation rates. However, 15% felt inflation may rise or expressed uncertainty over the trajectory. This matches estimates from the Indian Institute of Management-Ahmedabad’s latest business inflation survey as well. For the past six months, companies’ one-year inflation expectations have hovered around the RBI’s 4% target.
Similarly, on interest rates, 59% of CEOs polled do not foresee any shifts in the central bank’s policy interest rates. The RBI has left its repo rate unchanged at 6.5% since February after 250 basis points of hikes in 2022-23. However, 30% lean towards prospects of rate cuts by mid-2024 as projected by several analysts. A small 11% feel rates may rise or could not offer a clear view.
The implications are multifold. Executives seem to be preparing business strategies assuming flat inflation and borrowing costs in the near future. This provides continuity and ability to plan budgets appropriately. It also signals faith in the RBI and government’s vigilant approach to tame prices while supporting growth. However, uncertainties persist given risks around geopolitics, commodity dynamics and the pandemic.
Overall, such surveys help understand how captains of industry are thinking and the expectations plugged into their outlook. Periodic assessments of their perspectives offer valuable inputs for policymakers too to design measures ensuring stability in an inflation-sensitive economy like India. Continued coordination between the government, RBI and corporate sector will be pivotal amid complex challenges.
The survey throws light on questions most crucial for India Inc as it navigates operations and expansion plans. Feedback will aid relevant authorities crafting policies conducive to long-term business confidence and consumer spending strength vital for balanced economic health.
