The lingering slowdown, election-led uncertainties and strict regulatory interventions have been affecting growth and pulling down profits, according to a survey of chief financial officers.
"The continuing economic uncertainty together with the upcoming elections and current regulatory regimes bringing in increased scrutiny by the government are creating challenges in managing stakeholder perceptions and sustaining growth and profitability," a CFO survey by Deloitte India said.
The survey is based on responses from over 100 CFOs of listed and unlisted companies across sectors with a profit of under Rs 250 crore (Rs 2.5 billion) to over Rs 2,500 crore (Rs 25 billion) in revenues.
It said as many as 61 per cent of the surveyed CFOs view slowdown as one of the key concerns followed by depreciation of the rupee (47 per cent), inflation (38 per cent) and government attitude and ability to bring about economic reforms (37 per cent).
"CFOs (also) perceive the government's inability to bring about economic reforms at desired levels and the increased scrutiny by the government for regulatory compliance as some of the other critical challenges," Sanjoy Sen, senior director at Deloitte India, said.
Slowdown in the domestic economy and high inflation are recognised as the top macro-economic challenges across all verticals.
Despite many risks and challenges, CFOs are designing strategies to steer through the turbulent times by focusing on revenue growth, value preservation, and cost containment while taking steps to enhance operational scalability, Sen said.
"Around 68 per cent CFOs believe that the economy is likely to take a positive turn over the next few months, thus reflecting an optimistic outlook regarding the future state of economy, beyond the one year horizon, compared to 44 per cent recorded in 2013," Deloitte said.
The survey has also revealed that the CFO continues to expand beyond the traditional financial domain of being an operator or steward to more strategic and catalyst aspects.
Almost 98 per cent of CFOs are of the view that the new Companies Act would affect their roles in various ways.