Afternoon D & C Dedicated To Mumbai
Home > Business > Upping govt spending can’t revive investments: India Ratings

Upping govt spending can’t revive investments: India Ratings

Thursday, October 12, 2017

Muted demand and high leverage will ensure that a recovery in investment cycle does not happen before FY20, and government efforts on this by upping spends will also be ineffective, a report said yesterday.

"The broadbased recovery in the investment cycle is only expected to happen after FY20 as per our base case estimates due to moderate consumption demand outlook, weak pace of nominal growth recovery and global over capacity," domestic ratings agency India Ratings said.

The agency, a unit of global ratings agency Fitch, added that the corporates will shy away from investments despite the prevailing low interest rates.
Growth in gross fixed capital formation, which is a proxy for gauging investments, is also declining, the agency said, pointing out that it decelerated to 3% in Q1FY18 as against 6% in FY16.

Even as the government spending was up during FY16-17, there was a decline in the gross fixed capital formation in the same years, and the number has come down till 27.5% in Q1FY18, it said.

"If private corporate spending in manufacturing or infra continues to deteriorate, it may have a moderating impact on the gross fixed capital formation," it warned.

It is essential for the overall capacity utilisation to go up to 85-90% from the current 65-70% for corporates to start spending, it said, adding this is unlikely in the next two years.

COMMENTS
No Comments Posted
POST YOUR COMMENTS
Name:  
 
Email:    
Comments:
 
 
City news
With strictures passed by the Bombay High Court ...
The Indian Railways has stepped up to be ...
Trouble seems unending for the BJP. Already facin
I am a female of 24 yrs. I have been married for
Dr. Rajan B. Bhonsle, M.D. (Bom)
Consulting Sex Therapist & Counsellor
Dr. (Mrs.) Minnu R. Bhonsle, Ph.D.
Consulting Psychotherapist & Counsellor
Astrology
Select Sun sign:
 
Aries (Mar 21 - Apr 20)
Aries (Mar 21 - Apr 20)The ruling emotion today will be passion. You will feel like chatting with your beloved the whole day. However, you will incur expenses and Ganesha advises you to remain balanced. But if you have decided already to go the whole hog, make fully sure you are in the right trappings. You will thereby experience love and warmth for one and all.
- Advertising -
Amid ongoing controversy over the back series GDP
India's current account deficit is expected to wi
Trade talks between China and the US, movement of
Read More