Rajya Sabha Report Highlights Trends in Private Capital Investment Over Five Years

The Ministry of Finance addressed an unstarred question in Rajya Sabha, outlining private capital investment trends in India over the last five years. The report covered private capital expenditure, corporate bond issuances, and bank credit flows, noting a recovery post-pandemic despite global economic instability.

In a comprehensive report presented to the Rajya Sabha, the Ministry of Finance, through Minister of State Pankaj Chaudhary, addressed an unstarred question posed by MP Randeep Singh Surjewala regarding the state of private capital investment in India over the past five years. The minister's response detailed 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) highlighted a steady increase in GFCF by private corporations, with a notable dip in 2020-21 due to the COVID-19 pandemic, followed by a recovery in subsequent years. GFCF by private non-financial corporations rose from Rs 19.0 lakh crore in 2018-19 to Rs 29.0 lakh crore in 2022-23, while GFCF by private financial corporations showed a modest increase from Rs 0.4 lakh crore to Rs 0.5 lakh crore in the same period.

Minister Chaudhary addressed concerns about the recent slump in private capex to a 20-year low in the April-June quarter of 2024, citing global economic instability, high borrowing costs due to elevated interest rates, and lingering pandemic effects on supply chains as primary factors.

The Securities and Exchange Board of India (SEBI) reported raising Rs 36,92,437 crore through listed non-convertible securities over the past five years, with a significant increase in public issues and private placements in 2023-24, totaling Rs 8,56,924 crore, up from Rs 6,89,771 crore in 2019-20. This trend indicates a growing reliance on corporate bonds for capital. Data from the Reserve Bank of India (RBI) showed a consistent rise in bank credit flows to industries and corporates, excluding MSMEs, over the last five years.

Gross outstanding advances rose from Rs 40,29,744 crore in 2019-20 to Rs 57,76,264 crore in 2023-24, reflecting banking sector support for corporate expansion and investment. Despite a pandemic-induced contraction in 2020-21, GFCF showed robust recovery with a compound annual average growth of 12.3% between 2019-20 and 2023-24, increasing from Rs 57.2 lakh crore in 2019-20 to Rs 91.1 lakh crore in 2023-24.

The pandemic caused a 5.2% decline in capital formation in 2020-21, but subsequent years saw substantial growth, including a 28.7% increase in 2021-22. (ANI)