Investments fall for second year in row in 2014-15

Gross capital formation decreased by 18.3% in 2014-15

Industries continued to shy away from investments in 2014-15, showed comprehensive data released by the Central Statistics Office on Friday.

Gross capital formation (GCF), which connotes investment in the economy, contracted for the second straight year in 2014-15 with the pace of fall accelerating, showed annual survey of industries (ASI).

GCF decreased by 18.3 per cent in 2014-15, after it was down by 5.6 per cent in the previous year, ASI data revealed.

The data is in nominal terms, which means that it has not been adjusted for inflation.

Investments by industries have been on a downturn due to overleveraged balance sheets of the companies.

Gross value added (GVA) by industry grew by 9.3 per cent in 2014-15 (in nominal terms), up from 5.7 per cent in 2013-14 the data showed.

The ASI dataset is a more comprehensive measure of industrial growth than the index of industrial production (IIP) as it encompasses both registered small and registered medium industries - where all units employing at least 10 workers and using power, or 20 workers and not using power are covered. But as it does not capture unregistered entities, there are some differences in the numbers between the GDP data and the ASI numbers. This dataset along with the MCA21 database is used by the CSO to arrive at estimates of gross value added.

GVA by industry as per GDP data grew by 8.4 per cent in FY15, down from 9.1 per cent in FY14.

The ASI data which comes with a lag of two years show that the number of factories rose by 2.6 per cent in 2014-15, from 224,576 in 2013-14 to 230,435 in 2014-15. While the number of workers employed rose by 3 per cent in 2014-15, wages paid to workers grew by 11.1 per cent. In 2013-14, wages had grown at 14.1 per cent. Profits grew at 4.6 per cent in 2014-15, after contracting by 1.1 per cent the year before.