Amidst a potential global slowdown, a majority of business leaders in India believe Budget 2023-24 will help fuel economic growth across sectors and industries, a new pre-Budget survey has found.

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Over 60 percent of India Inc conveyed confidence about India growing above 6.5 percent, according to the pre-Budget survey by Deloitte Touche Tohmatsu India LLP (DTTILLP), which states that the optimism was relatively more pronounced amongst sectors with better performance and outlook driven by strong domestic demand.

The survey pointed out that the capital goods sector has performed well in recent quarters, and higher policy rates have helped banks improve margins. Geopolitical uncertainties have created opportunities for sectors such as chemicals, electronics, and energy, while digitisation has helped the technology sector.

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These sectors expressed confidence in growth being high and felt that government initiatives, such as Atmanirbhar Bharat, PLI, and favourable monetary policies by RBI (to moderate retail inflation and maintain significant forex), increased spending on infrastructure, and research and innovation, will further this momentum. However, respondents from food processing are divided on the growth outlook.

Business leaders surveyed by Deloitte believe the budget would define the “Amrit Kaal” agenda for India and fuel the economy to remain resilient and continue to grow at a healthy pace while balancing concerns around inflation and global risks

Reflecting on if the digitisation push has been helpful, the survey indicates 57 percent of respondents across the board believe that the recent initiatives have been very beneficial, while 37 percent believe it has been somewhat beneficial

“The government’s digitisation initiatives may require a targeted approach for the textile and capital goods sectors,” they said.

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Fifty-six percent of respondents feel that aggressively collaborating with the private sector to create and complete digital projects will boost digitisation efforts. Also, increased focus on R&D as well as private-sector engagement in R&D funding will transform India into a digital powerhouse, the report said.

What does the industry expect from Budget 2023?

Up from 55 percent last year, 73 percent of respondents this year said they were optimistic the forthcoming budget would be supportive of their sector's growth. These sectors, including electronics manufacturing, capital goods and textiles, are most positive and hopeful of the upcoming budget, followed by food processing and BFSI.

Sanjay Kumar, Partner, Deloitte Touche Tohmatsu India LLP, said the industry expects a slew of measures for economic growth, with a strategic focus on infrastructure development, boosting exports, easing compliances, and leading the nation towards carbon neutrality, in line with R.A.I.S.E, as enshrined in G20/B20.

A total of 59 percent of the respondents advocated that extending PLI scheme incentives for additional years would facilitate and increase their production capacity. Seventy-one percent of food processing and 70 percent of telecom and technology respondents expected an extension.

Most respondents across all sectors, except electronics manufacturing and energy, advised broadening the scope of PLI programmes to include other sectors. Surprisingly, respondents did not expect the scheme to address skills and incentivise R&D under its purview, the report noted.

Taxation changes and expectations

Ease of availing Input Tax Credit (ITC) and removal of GST credit restrictions were the top GST-related changes expected from the budget, the survey report suggests, with energy, BFSI, and life sciences and health care amongst top sectors to expect so.

More than 65 percent of respondents stated the most beneficial direct tax-related reform would be to make tax compliance easier. Rationalising tax rates across the assets and gains indexation was rated as extremely advantageous by 55 percent of respondents, while 70 percent of respondents think modifying personal taxation would support individuals. Over 60 percent of business leaders said they anticipate increasing tax exemption and deduction limits. A total of 75 percent of respondents support group taxation and want it to be put into effect within a year, the survey said.

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First Published:Jan 13, 2023 3:32 PM IST