Minister Pankaj Chaudhary Discusses Private Investment Trends in India
New Delhi [India], August 6: Minister of State for Finance, Pankaj Chaudhary, presented a detailed report to the Rajya Sabha addressing a question by Randeep Singh Surjewala about private capital investment in India over the past five years.
Key Highlights
The report covered private capital expenditure (capex), corporate bond issuances, bank credit flows, and gross fixed capital formation (GFCF). Data from the Ministry of Statistics and Programme Implementation (MoSPI) showed a steady increase in GFCF by private corporations, despite a dip in 2020-21 due to the COVID-19 pandemic.
GFCF Trends
| Year | GFCF by Private Non-Financial Corporations (Rs lakh crore) | GFCF by Private Financial Corporations (Rs lakh crore) |
|---|---|---|
| 2018-19 | 19.0 | 0.4 |
| 2022-23 | 29.0 | 0.5 |
Minister Chaudhary noted a slump in private capex to a 20-year low in the April-June quarter of 2024, citing global economic instability, high borrowing costs, and lingering pandemic effects as primary reasons.
Corporate Bonds and Bank Credit
The Securities and Exchange Board of India (SEBI) reported that Rs 36,92,437 crore was raised through listed non-convertible securities over the past five years. The amount raised in 2023-24 was Rs 8,56,924 crore, up from Rs 6,89,771 crore in 2019-20.
Data from the Reserve Bank of India (RBI) showed a consistent increase in bank credit flows to industries and corporates, with gross outstanding advances rising from Rs 40,29,744 crore in 2019-20 to Rs 57,76,264 crore in 2023-24.
Recovery Post-Pandemic
Despite a 5.2% decline in GFCF in 2020-21 due to the pandemic, there was a robust recovery with a compound annual average growth of 12.3% between 2019-20 and 2023-24. GFCF at current prices increased from Rs 57.2 lakh crore in 2019-20 to Rs 91.1 lakh crore in 2023-24, with a notable 28.7% increase in 2021-22.
Doubts Revealed
Pankaj Chaudhary -: Pankaj Chaudhary is a Minister of State for Finance in India. He helps manage the country’s money matters.
Rajya Sabha -: Rajya Sabha is one of the two houses of the Parliament of India. It helps make laws and discuss important issues.
private capital investment -: Private capital investment means money that private companies spend to grow their business, like buying new machines or buildings.
gross fixed capital formation (GFCF) -: Gross fixed capital formation (GFCF) is the total money spent on new assets like buildings, machinery, and equipment by businesses.
COVID-19 pandemic -: The COVID-19 pandemic is a global outbreak of a virus that started in 2019, causing many people to get sick and affecting economies worldwide.
Securities and Exchange Board of India (SEBI) -: The Securities and Exchange Board of India (SEBI) is an organization that regulates the stock market and protects investors in India.
Reserve Bank of India (RBI) -: The Reserve Bank of India (RBI) is India’s central bank. It manages the country’s money supply and interest rates.
corporate bond issuances -: Corporate bond issuances are when companies borrow money from people by selling bonds, which are like IOUs that promise to pay back with interest.
bank credit flows -: Bank credit flows are loans given by banks to businesses and individuals to help them grow or buy things.
private capex -: Private capex means capital expenditure by private companies, which is money spent on long-term assets like buildings and machinery.
global economic instability -: Global economic instability means the world economy is not stable, with problems like high prices or low growth affecting many countries.
high borrowing costs -: High borrowing costs mean it is expensive for companies to take loans because of high interest rates.
