Advertisement

Help
You are here: Rediff Home » India » Business » Report
Search:  Rediff.com The Web
Advertisement
   Discuss   |      Email   |      Print | Get latest news on your desktop

Investment not hit by inflation, RBI moves: CMIE
 
 · My Portfolio  · Live market report  · MF Selector  · Broker tips
Get Business updates:What's this?
Advertisement
August 20, 2008 11:16 IST

Sky-rocketing inflation and the subsequent stringent monetary measures initiated by the Reserve Bank to curb it have not impacted the pace of fresh capital investment, a Centre for Monitoring Indian Economy report has said.

"Rising inflation and the RBI's attempts to combat it through monetary tightening are leading to fears of the investment boom in India cooling off," the CMIE said.

The pace of fresh capital investment, however, continues unabated, the think thank said. "The relentless rise in the flow of fresh capital investments reflects India Inc's confidence in the continuation of buoyancy in the consumption demand."

According to the report, although rising interest rates are expected to dampen the profitability of Indian corporates, "it is not a very significant burden to make them cancel their fresh investment plans or stall those under implementation".

"Our close monitoring of projects through the CMIE CapEx service shows an acceleration in the announcement of fresh investment," it said.

The CMIE, which captured fresh projects worth Rs 1.96-lakh-crore (Rs 1.96 trillion) in July, said average monthly capturing of fresh investments was Rs 66,895 crore (Rs 668.95 billion) in 2005-06, which accelerated to Rs 1.10-lakh-crore (Rs 1.10 trillion) in 2006-07 and further to Rs 1.44-lakh-crore (Rs 1.44 trillion) in 2007-08.

In the first quarter of this fiscal, CMIE CapEx service captured projects worth Rs 5.14-lakh-crore (Rs 5.14 trillion), averaging at Rs 1.71-lakh-crore (Rs 1.71 trillion), the report said.

Interest expense accounts for around 1.5 per cent of the sales of manufacturing sector, the report said, adding that 'the interest rate hardening was not a roadblock to the implementation of outstanding projects.'

According to the report, projects totalling Rs 48,284 crore (Rs 482.84 billion) were commissioned between April 1 and July 31 this year, whereas projects worth Rs 2,69,246 crore (Rs 2,692.46 billion) were scheduled for completion during the remaining eight months of the current financial year.

The interest rate hike is unlikely to have any adverse impact on the commissioning of these projects, the report said, adding that, "in fact, some of the industries are expected to witness a major acceleration in capacity addition in fiscal 2008-09."


© Copyright 2008 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.
 Email  |    Print   |   Get latest news on your desktop

© 2008 Rediff.com India Limited. All Rights Reserved. Disclaimer | Feedback