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Saturday, July 13, 2024

India Inc.’s investing activity was restricted to several areas: Bank of Baroda

<p>A Bank of Baroda research report claims that India Inc.’s investment activity is now restricted to certain areas rather than being widespread.<img decoding=”async” class=”alignnone wp-image-278484″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob–750×500.jpg” alt=”theindiaprint.com india inc s investing activity was restricted to several areas bank of baroda bob” width=”1391″ height=”927″ title=”India Inc.'s investing activity was restricted to several areas: Bank of Baroda 3″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob–750×500.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob–1024×683.jpg 1024w, https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob–768×512.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob–150×100.jpg 150w, https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-india-inc-s-investing-activity-was-restricted-to-several-areas-bank-of-baroda-bob-.jpg 1200w” sizes=”(max-width: 1391px) 100vw, 1391px” /></p>
<p>The research claims that it is unclear whether or not investment has increased this year from a funding perspective.</p>
<p>It seems like big corporations are not issuing as many bonds or borrowing money from banks. According to the study, as of September, aggregate credit growth was 20%, while bank loan growth to the major industry was just 6.1% year over year (y-o-y).</p>
<p>Credit growth was greater in every other industry. According to the data, finance businesses accounted for 84% of the Rs 4.12 lakh crore in total capital generated in the first seven months of the bond market.</p>
<p>The data on investment plans based on announcements is also not particularly optimistic, according to the Bank of Baroda research, since no comprehensive picture is provided. Eighty-three percent of these announcements were related to chemicals, electricity, and transportation, with transportation accounting for 57% of the total.</p>
<p>According to the firms’ balance accounts, the whole amount of gross fixed assets and capital projects in progress were added together and compared over time.</p>
<p>According to the research, the growth rate for September 2023 is compared to that of March 2023 and then to that of 2022.</p>
<p>Another level uses the year-over-year method to calculate the growth rate until September 2022. The main conclusions were: (a) The increase in the fixed asset stock for a sample of 1,420 enterprises was 3.6% in March 2022 as opposed to 2.1% throughout the six-month period from March to September 2022.</p>
<p>As a result, even if the growth rate is greater than it was a year ago, the stock has increased at a somewhat slower pace; also, (b) year over year growth for the year ending in September 2023 was 7.9%.</p>
<p>According to the research, after the lockdown prompted by COVID, businesses in the infrastructure and media industries, as well as several in retail, have boosted their fixed assets.</p>
<p>Although the rise over March in 2023 was lower than in 2022, which had seen stronger growth owing to the expenditures undertaken to fulfill pent-up demand that has diminished over time, consumer durables did show a higher than average growth.</p>
<p>The fixed asset expansion in the diamond and jewelry industries has been substantial, and this increase is consistent with the strong demand-driven rise in output. But in September 2023, growth in industries including FMCG, hotel, paper, electronics, non-ferrous metals, and logistics was less than the sample average.</p>
<p>There was a rebound over previous year in terms of increase over March, which is a representation of activity in the current fiscal year. These sectors, which were impacted by the lockdowns in 2020 and 2021 and have been steadily recovering, include FMCG, hotel, and logistics. As may be seen, fixed asset growth has been muted over this time.</p>
<p>However, according to a Bank of Baroda analysis, the expansion of fixed assets trailed behind in industries such as electricity, real estate, banking, IT, healthcare, auto-ancillaries, textiles, real estate, plastic goods, and commerce.</p>
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