Along with the Government’s promise of putting in more money into investment, corporates in India are also likely to allocate a higher amount towards capital expenditure (capex).

 

The year 2015 is likely to see some revival in the corporate capex cycle, according to Deloitte India’s CFO Survey.

 

About 54 per cent of respondents believe that their capex will be higher during the course of the year and 53 per cent expect hiring to pick up.

About 44.6 per cent of the CFOs revealed that they expect higher capex and higher hiring over the next one year, Deloitte India said in a statement quoting its study.

 

In the short-run CFOs are highly optimistic with around 65 per cent of them positive about economic growth prospects for the domestic economy.

As the economy picks up pace, corporate profitability is also expected to show a meaningful uptick over the next one year. About 78 per cent of the CFOs believe that they will experience an increase in revenue, while 71 per cent expect higher earnings.

 

“Rise in CFO optimism in the short-term is in line with other key developments such as inflation coming under control, the current account deficit contracting to manageable levels and the likelihood of the Government meeting its fiscal target,” said Deloitte spokesperson.

 

However, CFOs do not expect it to be a smooth ride. Even as growth has turned around and business confidence is on the rise, regulatory impediments and uncertainty in the tax environment continue to be one of the major concerns shared by the CFOs.

Further, while inflation has moderated enough for the Reserve Bank of India to start the rate cutting cycle, it continues to be a concern shared by 25.8 per cent of the CFOs.

 

The Deloitte India CFO survey 2015, is based on responses of over 100 CFOs spanning across a plethora of sectors, from small-scale to large-scale companies, with revenue spanning from less than Rs 250 crore to higher than Rs 2,500 crore.

 

rajesh.kurup@thehindu.com

 

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