Indian companies to invest $40 billion in 2008/09 - RBI

In a recent study, Reserve Bank of India (RBI) has announced that the fresh projects will see the investment coming from Indian Private Firms up to 1.73 trillion rupees ($40 billion) during the year 2008/09. The investments however would be lowed compared to last year by 30%, the year which saw investment of 2.45 trillion rupees.

In the August bulletin of the article titled, “Corporate Investment: Growth in 2007-08 and Prospects for 2008-09,” it was written that due to higher global oil prices, rising interest rates, input and wage costs there are more downside risks to corporate profitability.

According to the Department of Statistics and Information Management, the slow growth rate of domestic and global economy, may cause drop in investments from corporates. The environment for the fixed investments due to its cyclical nature could become less conducive.

The companies get an indication of growth plans through investments and in order to sustain the economic growth, fresh investments play a crucial role. However, RBI is hopeful that the economy would expand by around 8% in 2008/09 on the back of 8.8% average growth in the last five years.

In the year 2007-08, total cost to sanction the projects was of 2.84 trillion rupees, which was 9.31 billion rupees higher than 2.83 trillion rupees for 1,054 projects in 2008-07.