It is close to a year since the implementation of the Goods and Services Tax, and a significant percentage of the country’s chief financial officers believe that it had a positive impact on the overall business climate, a Deloitte survey said.
According to Deloitte India’s annual chief financial officers survey, 77 percent CFOs believe that the GST has had a positive impact on the overall business. The survey represents the viewpoints of over 250 CFOs in India. The respondents included CFOs from listed and unlisted companies , from private sector and PSUs, Indian and multinational companies.
Fifty-seven percent of CFOs are now willing to take greater business risks, as the next couple of years are expected to be a period of consolidating gains from recent reforms.
“Introduction of the GST necessitated a re-look at the existing business models by the CFOs. It had far-reaching implications on business functions, where the impact was on taxation, finance, legal, IT systems and supply chain. Overall, the GST’s value proposition has been appreciated by CFOs,” said Porus Doctor, partner at Deloitte India.
The survey said 53 percent of CFOs believe there would be an increase in organisations’ headcount over the next 12 months. While digitisation may reduce manual intervention, the increase in headcount would possibly come from operations growth and requirement for new skill sets and geographical expansion.
According to the survey, the GST impact reflected better on the revenue and supply chain, and 58 percent CFOs saw an improvement in ease of doing business. On the other hand, 66 percent of the CFOs surveyed felt the industry witnessed a negative impact on the working capital, and 55 percent of the CFOs felt its impact on finance cost after the implementation of the GST.
Although 83 percent CFOs are optimistic about an increase in revenue, only 45 percent are hopeful of an increase in operating margins. This is driven by concerns over productivity improvements and increasing costs with changing technology and regulatory requirements.
Regarding the economic outlook, two-thirds of the respondents were positive about economic prospects in the near term, as many as 94 percent were optimistic about the next two-three years.