There is a continuous decline in the investment of these companies
investment ; The world economy including India is recovering after fighting the demon of inflation that arose after the Corona epidemic, but amidst the problem of recession due to inflation in the world and the crisis of deflation in China, which has the largest population in the world, Indian companies are facing difficulties. The future outlook appears to be negative or stable. The gloomy outlook for the company’s future is indicated by its current capital investment figures.
There has been a slowdown in investment and capital expenditure across the entire corporate sector, including India’s public sector enterprises, i.e. government companies. According to data from Motilal Oswal Financial Services, corporate capital investment has declined for the second consecutive quarter in the April-June period of the financial year 2023-2024.
Nikhil Gupta and Tanisha Ladha of Motilal Oswal Financial Services have written in their new report on the country’s corporate investment that after a decline of 0.5 per cent, corporate investment is expected to decline by 6.2 per cent on an annual basis in the first quarter of FY 2024. . One assumption is the March 2023 quarter, a year earlier.
The slowdown in new investment has led to a sharp decline in total capital expenditure and a decline in the contribution of the corporate sector to GDP. The share of the corporate sector in investment or capital formation in the economy declined to 41.2 per cent in the first quarter of FY2024 from 43.9 per cent in FY2023. This figure is much lower than the pre-Covid average of 51 percent.
Interestingly, the decline in corporate capital expenditure is contrary to government claims. Recently, Union Finance Minister Nirmala Sitharaman said that the private capital investment cycle has improved after a long slowdown. According to him, government capital investment in the infrastructure sector has exceeded private investment.
RBI is also bullish on corporate capital expenditure. RBI’s latest report ‘Private Corporate Investment: Performance and Near-Term Outlook’ states that ‘Fixed capital investment (based on bank/FI approved projects) by private companies during 2019-20 and 2020-21 fell after a long It was the second consecutive year. Recession. Has been positive.
