High demand to push up corporate investments in 2008-09: RBI

Driven by high demand and improved capacity utilisation, the corporates are expected to pump in more money in the current fiscal on fresh and existing projects surpassing the record levels of Rs 2.45 lakh crore witnessed in 2007-08, says an RBI report.     

"As business confidence continues to remain strong...The private corporate investment in 2008-09 is likely to increase, although it may grow at a slower pace", said an RBI analysis on the corporate investment growth in 2007-08 and prospects for 2008-09.     

The turnaround in corporate investment, RBI said, "which began in 2002-03 and maintained healthy thereafter, is expected to be sustained in 2008-09".     

 

Pointing out that downside risks arising from high international oil prices, hardening interest rates etc will be there, the analysis said, "the domestic demand is still resilient and supporting overall economic growth, driving corporates to continue their expansion plans at the back of rising capacity constraints."     

The capital investment intentions for 2008-09 based on institutional assistance up to the end of March 2008, aggregates to Rs 1.48 lakh crore as against Rs 1.25 lakh crore in the previous year.     

The proposed investment taking into account financial assistance from other sources like ECBs and public issues, would work out to be Rs 1.73 lakh crore during the current fiscal, the analysis said.     

In addition to this, RBI added, the capital expenditure envisaged by the fresh projects in the private corporate sector has been above Rs 1 lakh crore in the past two years and "the incentive to invest are likely to remain strong in the current fiscal."