India Inc pins its hopes on jabs, rain, sentiment

Indian business leaders seem hopeful of an economic recovery led by more and more employees getting fully vaccinated, a good monsoon and consumer sentiment improving as the festive season begins from August-September.

As many states relax lockdowns, there is a rise in economic activity, particularly discretionary spending on cars, consumer appliances, travel, apparel and jewellery, among others.

Companies say that if India administers 8 million vaccines a day by July and increases rural health support, prospects for the economy will improve dramatically. Several corporate chieftains ET spoke to said the government has conveyed to leading industry bodies that it will lend support to ensure economic growth through appropriate policies and easing regulations around vaccinations.


“The second wave has caused great damage and the government is in a hurry to ensure our economy rallies, with the support of health infrastructure,” the chairman of a leading consumer company told ET.

Among several corporate leaders, Sangita Reddy, joint managing director, Apollo Hospitals, said India’s recovery would again surprise the world.

H2 of FY22 to be Better
Venu Srinivasan, chairman, TVS Motor Co, said the economy should “start recovering from August.”

“The number of cases has reduced sharply in metros and tier I-II cities,” said Amit Syngle, chief executive, Asian Paints. “With the increased vaccination rate, there is a clear positivity in the business index coming in. The monsoon being on time and predicted normal will also see increased economic activity to the second half of FY22.”

Some business leaders say government spending on infrastructure projects and housing is expected to pick up post monsoons, while construction activity by private builders will rally from September.

Martin Schwenk, chief executive at luxury car maker Mercedes-Benz India, said the last quarter of the year should witness a firm economic recovery, buoyed by strong customer sentiment that is usually associated with festive seasons in India. “We expect strong growth in October-December and better business stability in the coming weeks and months as overall sentiment continues to improve, with more markets opening up, triggering an uptick in economic activities,” he said.

Industry officials say government support in terms of stimulus, aggressive vaccination drives and preparing for a possible third wave by improving medical infrastructure will reduce fear in the community and promote economic recovery.

Discretionary Spending
The festive season will see accelerated growth and be a key indicator of economic activity, according to Dilip Chenoy, secretary general, Ficci. “Increase in vaccination will also minimise the impact of the third wave,” he said.

Bhaskar Bhat, director at Tata Sons, said the second wave’s impact on sentiment will be short-lived and, in fact, consumer sentiment is already showing an uptick. “Agriculture will make a strong comeback and the multiplier effect — once the lockdown ends and the consumer gets back to buying — will (manifest as) interest in discretionary spends. It will eventually outweigh the negative impact of the second wave on consumer sentiment,” said Bhat.

“With Tanishq and Caratlane, we have already seen extraordinary online sales, and in-shop buying has been only strained by lockdowns. Savings in other areas, in marriages where guests were limited, are seen moving into occasion-led purchases of jewellery or gifting of high-end goods,” he said.

The chairman of another conglomerate told ET that measures to minimise a future health crisis due to a possible third wave will help lead an economic revival.