07 August, 2009

Investments in India to grow despite slump: Crisil

In the next three years, Indian companies will pour Rs 10.5 trillion ($215.25 billion) into industrial expansion, research and ratings agency Crisil said in the report covering 11 sectors of the economy released Thursday. That’s down about 25% from announced capital spending plans, but still represents an average compound annual growth rate of 7% through the fiscal year ending March 2012, said Crisil research head Manoj Mohta.

Though investment in textiles and autos will be weak, investment in power is expected to rise 30 to 40% over the next three years, and investment in gas transmission and distribution is expected to double, which is a healthy sign for our economy

During past economic slowdowns in India, notably 1997-1998 and 2002-2003, private sector investment contracted by 1 to 2% a year due to cautious bank lending and weak demand. During the last four-year boom, however, Indian companies built up cash and today banks remain willing to lend to high-demand sectors like power and telecommunications, both of which are rapidly expanding.