Fresh investments are slowing due to poor demand and low capacity utilisation. This has worrying implications for future growth.
The Indian growth story is not firing on all cylinders as capital spending – both in private and public sectors – is on a downward spiral. Investment projects announced by India Inc. in 2016/17 stood at ₹8.17 lakh crore, the third lowest since 2005/06. Project completion during the year grew a paltry 0.8 per cent to ₹5.74 lakh crore, compared to 17 per cent in 2014/15 and 42 per cent in 2015/16. Taken together, the capital expenditure (capex) data from the Centre for Monitoring Indian Economy (CMIE), gross fixed capital formation, or GFCF, details from the Central Statistics Office (CSO) and data from the Index of Industrial Production (IIP) also indicate a sharp slowdown in capex and asset formation.
Mahesh Vyas, Managing Director at CMIE, blames it on sluggish demand. “Capacity creation grew at a rapid pace till 2011/12 in anticipation of good growth in demand. However, demand has been lagging, and companies are now facing low capacity utilisation. As additional demand can be met through higher capacity utilisation, there is no need for them to create additional capacity,” he says. After a steady decline for three consecutive quarters, capacity utilisation in the manufacturing sector stood at 72.7 per cent for the quarter ended December 2016. IIP data, a performance indicator across sectors, also show sluggish growth over the past 10 months. Also, Gross Value Added (GVA) in manufacturing sector stood at 7.9 per cent in 2016/17 compared to 10.81 per cent the previous year. Services also saw a dip in its growth from 9.7 per cent in 2015/16 to 7.74 per cent in 2016/17.
هذه القصة مأخوذة من طبعة July 30, 2017 من Business Today.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 8500 مجلة وصحيفة.
بالفعل مشترك ? تسجيل الدخول
هذه القصة مأخوذة من طبعة July 30, 2017 من Business Today.
ابدأ النسخة التجريبية المجانية من Magzter GOLD لمدة 7 أيام للوصول إلى آلاف القصص المتميزة المنسقة وأكثر من 8500 مجلة وصحيفة.
بالفعل مشترك? تسجيل الدخول
Haute Couture in the Kitchen
FASHION BRANDS ARE ENTERING THE RESTAURANT SPACE, AS FOOD SEEMS TO HAVE BECOME THE ULTIMATE FASHION STATEMENT
It's Personal
Mixing work and personal tasks on work machines may be a done thing for many, but it makes sense to have a dedicated device for your personal needs. Here are two such devices
INTO THE BLUE
For WTiCabs Founder and CEO Ashok Vashist, scuba diving is not just an adventure sport. It is a pathway to connect with the ocean
"Challenges are opportunities"
AMIT JAIN CO-FOUNDER & CEO CARDEKHO GROUP CarDekho Group is a digital automotive solutions provider
THE WAIT FOR HIGHER PENSION
ALMOST 18 MONTHS AFTER THE SUPREME COURT RULING, SUBSCRIBERS WHO OPTED FOR A HIGHER PENSION UNDER THE EMPLOYEES' PENSION SCHEME CONTINUE TO WAIT AS THE EPFO, FACING A STAFF CRUNCH, TRIES TO FIGURE OUT THE MATH
"It's possible to have a 25% growth out of India from now on"
Rail Europe Executive Chairman & CEO Björn Bender talks about the India market, the shift to digital, and the way ahead
Evolving Strategies
Companies need to adapt to changing times for a strong workforce
PERKS PRESSURE
IT'S NOT JUST ABOUT THE MONEY ANYMORE FOR EMPLOYEES. FROM FOUR-DAY WORK WEEKS, TO SKILLING ON THE JOB AND MENTAL WELL-BEING EXERCISES, COMPANIES ARE OFFERING A HOST OF BENEFITS TO RETAIN TOP TALENT. IS THIS ENOUGH?
FOSTERING PLURALISM
Axis Bank, with its initiatives and policies, is striving to make a holistic difference to people's careers and hone their skills too
In Keeping With The Times
With a slew of initiatives for its employees, Abbott India is working hard to build a diverse and inclusive workforce