Mumbai: Over the past few quarters, India has seen a decline in investments. According to Care Ratings, the decline in investments is nearly two decades low. Such fall is expected to hit the growth story of the country which is already facing a slowdown.
INVESTMENT RATE GRAPH
The investment rate, measured as Gross Fixed Capital Formation (GFCF), as a percentage of GDP, fell to nearly two decades low, stated the report by the rating agency. It is estimated at 27.5 per cent of GDP as per the second advance estimate for FY20.
“When compared with a year ago, the investment rate was 1.5% lower than the 29% of GDP in FY19. GFCF is estimated to contract by -0.6% for the first time in the past 17 years. This number may be revised downwards as the year-end phenomenon of increasing investment in March will not materialise,” stated Care Ratings.
CAPITAL GOODS GROWTH
There was a drop in Capital goods growth as well. “ For the first time in the past five years, capital goods registered a contraction in the production of capital goods.” Capital goods index witnessed a de-growth by 11.6% during FY2020 (April – January) as against the 5.7% growth in the corresponding period last year. The decrease in capital goods was led by commercial vehicles and other ancillary activities.
STATE WISE INVESTMENTS
Haryana was the biggest gainer with the highest share of investments, followed by Gujarat. While states like Maharashtra, Andhra Pradesh, Rajasthan, Tamil Nadu, MP and others, were among the top ten states that attracted investments but compared to last year their share had drastically dropped.
“Domestic activities were already constrained on account of disruptions in the global supply chain and were further impacted post announcement of lockdown. This could dampen the investment scenario in FY20,” the report said.
