Skip to main content

"Worrying" signs: Private sector capex plans decline 11%, corporate profits down 0.05%: Reliance think-tank expert

By Our Representative
Painting a gloomy picture of the Indian economy, a Reliance Industries think-tank analysis has said that, despite the Make in India campaign of Prime Minister Narendra Modi, statistics about domestic investment and capital formation are “not encouraging” and show a “decline in the second quarter of 2015”, with “India's saving rate down from a peak rate of 38 percent to 31 percent.”
The analysis, released by the Observer Research Foundation (ORF), titled “Urgent need for investment”, by ORF senior fellow Jayshree Sengupta, says, “Everyone watching the economy is worried about the slow rate of investment which is not forthcoming from the Indian corporate sector.”
Sengupta says, “Net profits in the second quarter of 2015-16 have remained flat at 0.05 per cent for the corporate sector. Except for pharmaceuticals, fast-moving consumer goods and automobiles, companies are struggling to pay off debts.”
Quoting international rating agency Standard & Poor (S&P), the analysis says, “100 corporates had a debt of $300 billion in 2014. High interest payments towards paying back of corporate debt are cutting into their profits.”
Citing Indian rating agency Crisil, she says, an analysis of the 192 listed public and private sector companies suggest that “key sectors such as infrastructure, energy, metals, cement, automobiles, pharmaceuticals, and textiles, showed 4 per cent decline in capital expenditure for 2015-16.”
Pointing out that “for private sector companies the capex plans declined even more by 11 per cent”, Sengupta says, “Corporate sector depends a lot on rural demand and there has been bad news on the agricultural front.”
“Agricultural stress is still present and agricultural growth slid to 1.5 per cent in April-June quarter. Rural demand is also dented because of falling wage growth due to three consecutive monsoon shocks. Slack demand is also due to low earnings from agricultural exports because of low commodity prices”, the analyst says.
Stating that “global commodity prices have fallen by nearly 17 per cent compared to last year”, she says, “Sales of the corporate sector have declined by 4 per cent. Due to low rural demand, there is piling up of inventories in factories and thus new investment by the owners is being stalled.”
The analyst adds, “According to Reserve Bank of India, factories are running 30 per cent below capacity. In ten out of 12 sectors, capacity utilization is at a five-year low causing new project announcements to dry up.”
Wondering why, when there are 87 billionaires and 2.5 lakh dollar millionaires, investment is still not forthcoming in India”, Sengupta says, “In Make in India campaign, 25 areas have been listed and Modi wants to make India a new global manufacturing hub."
"But red tape, problems with availability of skilled labour, land acquisition, creaky infrastructure, mandatory clearances of various kinds and lack of clear exit laws, are holding back investors from coming forward”, the analyst adds.
“Manufacturing growth can be fueled by a big rise in export demand. But exports are down for 11 consecutive months and have shrunk by 17.5 per cent”, the analysis predicts, “Exports will remain sluggish for the next one year because of the slowdown in global demand with world output growing only at 3 per cent.”

Comments

TRENDING

Billion vaccine doses? Devil is in details: 70% haven't got 2nd jab; numbers jacked up

By Prof Ujjwal K Chowdhury*  India has reached the one billion Covid-19 vaccinations milestone. It is indeed a great news and a big salute to the less paid ordinary health-workers in interiors of India for this feat. The government wants all of India's 944 million adults to get vaccinated this year. Around three-quarters of adults in the country of 1.3 billion people have had one shot and around 30 percent are fully vaccinated, the government says.

Savarkar 'criminally betrayed' Netaji and his INA by siding with the British rulers

By Shamsul Islam* RSS-BJP rulers of India have been trying to show off as great fans of Netaji. But Indians must know what role ideological parents of today's RSS/BJP played against Netaji and Indian National Army (INA). The Hindu Mahasabha and RSS which always had prominent lawyers on their rolls made no attempt to defend the INA accused at Red Fort trials.

Top upper caste judges 'biased' towards Dalit colleagues: US Bar Association report

By Rajiv Shah  A high profile report prepared by the influential  American Bar Association (ABA) Center for Human Rights , taking note of the fact that “in the 70-year history of the Indian Republic, only six Dalit judges have been appointed to the Supreme Court”, has taken strong exception to what it calls “lack of representation of Dalits” in the legal profession and the judiciary.

Political consensus? Celebrations, with over 5,000 plus post-vaccine deaths in India

By Rosamma Thomas*  As India fully vaccinated nearly 20% of its population and celebrated the “milestone” of administering one billion (100 crore) Covid-19 vaccine doses, it was time to remember those who died shortly after vaccination . By October 20, 2021 Twitter handle C400T, tracking deaths reported to have occurred after receiving the Covid-19 shot in India, updated the 5,134th death.

Buddhist shrines were 'massively destroyed' by Brahmanical rulers: Historian DN Jha

Nalanda mahavihara By Our Representative Prominent historian DN Jha, an expert in India's ancient and medieval past, in his new book , "Against the Grain: Notes on Identity, Intolerance and History", in a sharp critique of "Hindutva ideologues", who look at the ancient period of Indian history as "a golden age marked by social harmony, devoid of any religious violence", has said, "Demolition and desecration of rival religious establishments, and the appropriation of their idols, was not uncommon in India before the advent of Islam".

Failure of 'trickle down theory' behind India's poor Global Hunger Index rating

By Dr Gian Singh*  On October 14, 2021, two organisations, Concern Worldwide (An Irish aid agency) and WeltHungerHilfe (a German organization that researches the problem of global hunger), jointly published the Global Hunger Index (GHI) for 2021. These organizations have included 116 countries in the world hunger rankings.

Swami Vivekananda's views on caste and sexuality were 'painfully' regressive

By Bhaskar Sur* Swami Vivekananda now belongs more to the modern Hindu mythology than reality. It makes a daunting job to discover the real human being who knew unemployment, humiliation of losing a teaching job for 'incompetence', longed in vain for the bliss of a happy conjugal life only to suffer the consequent frustration.

Uttarakhand, Kerala disaster due to policies favouring India's developmental mafia

By Vidya Bhushan Rawat*  Two of India’s most beautiful regions where thousands of people go to watch and feel the wonders of nature are suffering because of the extremely disastrous rains and floods. The pain that the rains brought to Kerala and Uttarakhand is a warning to all of us. It's nature’s warning to us to mend our ways.

March opposes Sabarmati Ashram renovation: 'Mahatmaji had kept open for access to all'

Counterview Desk A Sevagram to Sabarmati march, which began on October 17 from Wardha (Maharashtra) and will end on October 24 in Ahmedabad (Gujarat), has demanded that the Sabarmati Ashram, the government should not impose "the fashion and glitz of a shallow modernity" at the cost of Rs 1,200 crore, in the name of renovating the Ashram founded by Gandhiji.

Religious mobs replicate blasphemy laws, 'threatening' liberty in a free country

Nihangs, Lakhbir Singh By Ajit Singh*   A Dalit man, Lakhbir Singh, was mercilessly beaten up and lynched to death near farmers’ protest site in the State of Haryana allegedly by Nihang Sikhs. It was alleged that he committed blasphemy by desecrating the Holy Book Guru Granth Sahib.