Despite the increase in interest rates, the Reserve Bank of India is confident that corporate investment levels will go up during 2008-09 — though the pace of growth may be a tad slower than what has been witnessed in the last few years.
“With prospects of decelerating pace in growth of domestic and global economy, the environment for fixed investment could become less conducive. Though on balance, the risks to the outlook for fixed investment growth have somewhat tiled to the downside, the domestic demand is still resilient and supporting the overall economic growth.
This is driving companies to continue their expansion plans on the back of rising capacity constraints,” RBI said in the latest Monthly Bulletin.
The capital investment intention for the current financial year, based on companies having institutional assistance up to 2007-08, amounted to Rs 1,48,350 crore. If fund raising from sources other than banks and financial institutions — such as external commercial borrowings and public and rights issue is added up - the proposed investment adds up to Rs 1,73,173 crore.
Corporate India needs to invest Rs 71,934 crore during 2008-09 to surpass last year’s Rs 2,45,107 crore.
In the last two years, fresh projects in the private sector involved a capital expenditure of over Rs 1,00,000 crore.
