Number of the week: 0.97%

Business Standard
16th January

0.97%: NSO estimates for investment growth in 2019-20.

  • After the Reserve Bank of India had projected GDP growth at 5 per cent for 2019-20, a similar figure from the National Statistical Office (NSO), though disappointing, did not come as a surprise. A bigger shocker, though, was that investments are projected to grow at a meagre 0.97 per cent this year.
  • Many corporate groups had gone on an investment spree in the first decade of this century. This led to the balance sheets of many firms, and the banks they had borrowed from, becoming over-leveraged.
  • While companies have been trying to de-leverage, India’s banking sector has been struggling to cope with the issue of non-performing assets (NPAs) for many years now.
  • On top of these troubles, the ongoing slowdown in demand means that every corporate entity is trying to conserve cash. Investing in new assets is totally out of the question at present.
  • All eyes are now focused on the Budget to see what steps the government initiates to reverse the slowdown. It is unlikely that the investment growth figure will improve in a hurry — not until sentiment improves.

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A few links for further reading

Invest and emigrate

The great Indian dream of settling abroad is achievable if one has a few crores to invest. Rich nations offer a variety of investment options in a quid pro quo arrangement: immigrants get a better quality of life and revenue from them helps these countries’ finances. Wealthy Indians, troubled by polluted cities and the red tape holding up entrepreneurship, may want a quick ticket out of the country. Sanjay Kumar Singh lists a range of options: from a Canadian province’s investor programme to America’s US EB-5 plan.

Small savings schemes

Investors in small savings schemes breathed a sigh of relief when the government announced on October 1 that interest rates on these instruments would not be revised for the fourth quarter of the calendar year. With the economy witnessing a slowdown, and the stock markets also turning volatile, many investors are looking for alternative avenues to park their savings. Small savings schemes, with their sovereign guarantee, have emerged as a viable alternative.

Hard path to growth

The signals for the economy are not positive: overall demand is yet to pick up; the share of total exports in India’s GDP is declining, and industrial output pattern remains worrying.

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