Indian companies to invest $40 Bn

By siliconindia   |   Thursday, 21 August 2008, 16:32 IST
Printer Print Email Email
Mumbai: Indian private companies will invest $40 billion (1.73 trillion rupees) in fresh projects in 2008-09. It is a 30 percent decline from 2.45 trillion rupees 2007-08 according to the Reserve Bank of India (RBI). RBI in its August bulletin article "Corporate Investment: Growth in 2007-08 and Prospects for 2008-09" said that downside risks to corporate profitability has risen due to higher global oil prices, rising interest rates, input and wage costs. The Department of Statistics and Information Management at the bank said,"With prospects of decelerating pace in growth of domestic and global economy, environment for the fixed investments due to its cyclical nature could become less conducive." The RBI expects the economy to expand by around eight percent in 2008-09 on the back of an 8.8 percent average growth in the last five years. In 2007-08, 910 projects were sanctioned at a total cost of 2.84 trillion rupees, 9.31 billion rupees higher than 2.83 trillion rupees for 1,054 projects in 2006-07. Investment is a key indicator of growth plans by companies and fresh investments is essential for sustaining economic growth. Infrastructure projects accounted for nearly half of the total fund raising plans in 2007-08, up from 36 percent in 2006-07. Nearly 72 percent of the total investments in infrastructure were in 71 power projects followed by 52 technology parks and special economic zones. Nine telecom projects, four roads and water management projects and six ports and airports accounted for the rest of the projects in the infrastructure sector. Metals and metal products with a 16 percent share, coke and petroleum with a six percent share and cement with 4.9 percent accounted for a big chunk of fresh projects. Number of projects costing five billion rupees or more rose to 98 in 2007-08, from 88 in 2006-07. Among the states, Gujarat took the first place with 22 percent of the total investments with 100 fresh projects at a total investment of 624.42 billion rupees followed by Maharashtra with 12.7 percent and Orissa with 10.9 percent. Offshore borrowings were at 330.68 billion rupees in 2007-08 compared with 513.31 billion in 2006-07.