Indian Corporations' Investments Rise 39% to Rs 32 Lakh Crore in April-Dec 2024: SBI Findings
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Synopsis
According to the State Bank of India, Indian firms have recorded over Rs 32 lakh crore in investments during April-December 2024, representing a 39% increase from Rs 23 lakh crore in the same period last year. This surge indicates a robust economic outlook for the country.
Key Takeaways
- Investment surge of 39% to Rs 32 lakh crore.
- Future growth supported by Rs 13.63 lakh crore in work-in-progress capital.
- Government investments at 4.1% of GDP, a record high.
- Private investment share nearing 12.5% of GDP.
- Strong hedging practices among private firms.
Mumbai, Jan 23 (NationPress) Indian enterprises have disclosed investments exceeding Rs 32 lakh crore during the initial nine months (April-December) of the ongoing financial year, marking a remarkable 39 percent increase compared to the Rs 23 lakh crore recorded during the same timeframe last year, as per a report by the State Bank of India (SBI).
A robust pipeline of Rs 13.63 lakh crore in work-in-progress capital, as of March 2024, indicates a strong growth trajectory for the forthcoming years, the report highlights.
Government spending reached 4.1 percent of GDP in FY23, the highest level since FY12, while private sector investments as a portion of GDP rose to 11.9 percent, the highest since FY16. Preliminary data for FY24, anticipated by the end of February, is likely to indicate private investments approaching 12.5 percent of GDP.
On another note, external commercial borrowings (ECBs) continue to be a crucial funding avenue for Indian firms, with outstanding ECBs totaling $190.4 billion as of September 2024, reflecting a slight uptick from previous quarters.
Non-rupee and non-FDI components contribute $155 billion, providing stability through reduced volatility from hedging. Private enterprises account for 63 percent ($97.58 billion) of these borrowings, with 74 percent of their exposure hedged.
Private companies hold around 63 percent ($97.58 billion) of these borrowings, while public sector firms represent the remaining 37 percent ($55.5 billion). Private firms have displayed superior hedging strategies, covering approximately 74 percent of their exposure, raising the overall hedging ratio for non-rupee-non-FDI ECBs to about 68 percent, according to the report.
The trend of hedging has seen an upsurge, with two-thirds of total ECBs being hedged as of September 2024, an increase from 55 percent two years prior.
Among the non-hedged portion, some are supported by government guarantees, while others take advantage of natural hedges, where borrowers receive earnings in foreign currency. As of September 2024, natural hedges constituted about 1.5 percent of unhedged ECBs, as noted in the report.
