Corporate investments grew 11 percent year-on-year in FY23, while their share fell to 42.2 percent of total investments, the lowest in 19 years. Corporate investments fell to 12.6 percent of GDP in FY23
The companies are also possibly waiting for further clarity in the economic policies and business environment before loosening their purse strings as the country is likely to go to polls in May 2024. Image: Anindito Mukherjee/Bloomberg via Getty Images
Even as the perils of a pandemic are gradually ebbing off, companies are yet to fire up their spends in expansion plans. Perhaps lack of growth opportunities or simply limited supply of funds could be the reasons for slow corporate capex in India. The companies are also possibly waiting for further clarity in the economic policies and business environment before loosening their purse strings as the country is likely to go to polls in May 2024.
“Given that elections are likely in 2024, companies will be discreet. Expectations of rates coming down will also defer their plans of investments. Governments at both Centre and states are expected to meet their capex targets and hence sustain backward linkages,” says Madan Sabnavis, chief economist, Bank of Baroda.