The current political turmoil has severely impacted the business sentiment and corporate spending, according to a survey of chief financial officers (CFOs) of 136 firms. Nearly half of the CFOs in the latest ?Deloitte India 2012 CFO survey? expect inflation to increase, GDP growth to taper and industrial growth to stagnate amidst a complete lack of decision making process.
The survey results has also thrown up CFOs? apprehension on the major macroeconomic indicators with almost half of them projecting a negative outlook.
?A sizeable proportion, (43%) of the respondents consider political inefficiency as the most important cause of concern,? the survey said. Also 61% of the CFOs consider regulatory policies, inflationary pricing and input cost as key deterrents to industrial growth.
The CFOs also identified decreasing consumer demand as one of their organisation?s key challenges. Deloitte conducted the CFO survey among Indian companies (48%) and multi-national firms whose headquarters were outside the country (46%).
The survey covered CFOs from diverse background like manufacturing, consumer business, technology and media. “Organizations are rethinking their strategies to focus on maintaining consumer demand, margins and profitability, and building organizational resilience to external factors for long-term sustainability,” Sanjoy Sen, senior director, Deloitte told FE. The CFOs from the banking industry feared that the impact of the current economic situation on industries could lead to defaults on corporate loans by companies. “This might compel firms to exercise more prudency while investing in projects,” Sen said.
Highlights of Deloitte survey
based on CFO feedback
* 46% expect inflation to increase, GDP growth to taper and industrial growth to stagnate
* 39% expect stabilisation while 15% expect improvement in macroeconomic factors
* 43% consider political inefficiency as the most important cause of concern
* 60% expect increase in foreign market access to hedge risks
* 61% consider regulatory policies, inflationary pricing, and input cost as key deterrents to industrial growth
* 31% believe that their organisations would perform better going forward while 35% are apprehensive about poor performance
* 72% consider low consumer demand, domestic political uncertainties and declining exports as key challenges going forward
