Indian companies have announced investments of over 32 lakh crore in the first 9 months of this fiscal, according to a State Bank of India report. The same period last year saw growth of 39%. According to the report, a work-in-progress capital of 13.63 lakh crore as of March 2024 will have a very good growth.
Govt. investment: Government investment made up 4.1% of GDP in FY23, which is the highest since FY12, with private sector investment at 11.9% of GDP, the highest since FY16. Preliminary FY24 data expected by end Feb will likely show private investment to be at 12.5% of GDP.
Mean while ECBs continue to be a major source of funding for Indian companies. Outstanding ECBs stood at $190.4 bn as of Sep 2024 but only marginally higher than the last quarters.
Non-rupee and non-FDI part is $155 billion, stable in terms of lower hedging volatility. $97.58 billion accounts for 63% privately owned, and 74% of this is hedged.
Private companies hold 63% ($97.58 billion) of this, public sector companies 37% ($55.5 billion). Private companies are healthy in terms of hedging practices. 74% of their exposure is hedged. They have brought the overall hedging ratio for non-rupee-non-FDI ECBs to 68%, says the report.
Hedging is on the rise, two-thirds of the ECBs are hedged as of Sep 2024 compared to 55% two years ago.
The left-over one-third is unhedged and some of this is backed by government guarantees.
Another subset of this unhedged ECBs has natural hedges: borrowers' earnings are in foreign currency. Natural hedges make up 1.5% of the ECB's unhedged amount as of Sep 2024, according to the report.
