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The new coronavirus variant Omicron may affect the services sector adversely, said 55 of 100 chief executive officers (CEOs) polled earlier this month, while the supply chain disruption is another key concern for 70.
In a Confederation of Indian Industry (CII) poll, 34% of the CEOs said the spread of the new variant may also affect manufacturing activities. The survey included 100 top executives, 90% of them working in big firms.
There is a wave of Omicron in many European countries, including the UK that threatens restrictions and movement of goods. According to recent reports, UK witnessed 10,000 cases of Omicron cases on Sunday. The new variant of covid-19 in India is also spreading fast, with 30 new infections detected on Saturday, taking the total tally to 145. The affected sates include Maharashtra, Delhi, Telangana, Rajasthan, Karnataka, Kerala, Gujarat, Uttar Pradesh, Andhra Pradesh, West Bengal and Tamil Nadu. In its monthly economic review report, released on 11 December, the Union finance ministry also said the Omicron variant may pose “a fresh risk" to the ongoing global recovery, but its impact would be “less severe" for India due to the increasing pace of vaccination in the country.
The majority (56%) of CEOs are, however, confident that the Indian economy is set for a strong rebound in 2021-22, and it would grow in the range of 9-10 % in FY22.
Another 10% of them expect it to grow at a faster pace of more than 10% in the current financial year. India’s gross domestic product (GDP) grew at 8.4% in the second quarter ended September 2021 and 13.7% in the first half of the current financial year.
The Reserve Bank of India (RBI) on December 8, however, pointed at downside risks with the emergence of Omicron and renewed surge of covid-19 infections in several countries, and projected growth rate at 9.5% in 2021-22 consisting of 6.6% in Q3 and 6% in Q4.
According to the International Monetary Fund’s (IMF) World Economic Outlook October update, India is projected to grow at 9.5% in 2021 and 8.5% in 2022, the highest among major economies in both the years and ahead of China’s 8% and 5.6% growth in the respective periods.
“Government’s strong emphasis on public works, timely interventions to boost liquidity and several reforms carried out in the recent months including easing regulations, production linked incentives scheme, RoDTEP [Remission of Duties and Taxes on Exported Products] and several other bold reforms have buoyed the optimism on higher economic growth," said CII president T.V. Narendran.
CEOs of CII member companies are also upbeat on sentiments regarding their business.The majority of CEOs expect to make good profit.
