Even as the private investment is expected to accelerate going ahead, its sustainability needs to be closely watched, RBI said.
Even as the private investment is expected to accelerate going ahead, its sustainability needs to be closely watched, RBI said. The planned capital expenditure from all sources based on the pipeline projects sanctioned in all preceding years points to a marked improvement in FY20, the RBI also said in the monthly bulletin for February 2020. In the data analysis on investment intentions of the private corporate sector in India during FY19 and FY20, the RBI said that the total cost of projects sanctioned surged to Rs 2,53,705 crore in FY19 compared to Rs 2,07,673 crore in FY18. Similarly, the increase continued in the first half of FY20 over the same period of FY19. “The planned capex based on the pipeline projects (already sanctioned in preceding years) is estimated to be higher at ₹1,20,157 crore in 2019-20 over the previous year (₹84,602 crore)”, it added.
The RBI is positive on the perception of the Indian manufacturing companies about the demand conditions and the price situation during FY19. “The four rounds of IOS conducted during the year 2018-19 indicated optimistic demand conditions as evident in sentiments on production, order books, capacity utilization and employment; though, the outlook for the first quarter of 2019-20 remained subdued. The overall financial situation, though garnered optimism from majority of respondents, waned off gradually during the year with Q1:2019-20 pointing to some improvement”, RBI also said in the separate article on Sentiments of Indian Manufacturers in 2018-19.
Meanwhile, the Indian economy is seeing a slowdown for some time now on account of both domestic and global factors. Finance Minister Nirmala Sitharaman announced a slew of reforms in the past few months and even in budget 2020 to propel the slowing economy forward. According to the first advance estimates, the economy is projected to grow at nearly 5 per cent in FY20.